Certified Pennsylvania Evaluator Practice Exam

What does the economic age-life method presume about property depreciation?

1. All properties depreciate at the same rate

2. Properties of similar age have no depreciation

3. The economic life varies significantly among properties

4. Depreciation is only due to physical deterioration

The correct answer is: All properties depreciate at the same rate

The economic age-life method presumes that all properties depreciate at the same rate across a specific age range. This approach is based on the idea that the economic life of similar properties is comparable and that depreciation can be standardized based on age. The method utilizes a ratio of the property's effective age to its total economic life to determine the amount of depreciation. This assumption allows evaluators to apply a consistent depreciation rate when estimating the value impact of age on the property. It simplifies the depreciation calculation by not taking into account the individual characteristics of each property, which could vary significantly. Therefore, the premise of uniform depreciation rates among properties of a similar age is key to this method, enabling standardization in property assessment.