Alabama Real Estate Practice Exam

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Prepare for the Alabama Real Estate Exam. Utilize flashcards and multiple-choice questions, each coupled with hints and explanations. Ace your upcoming test!

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How is depreciation calculated using the economic age-life method?

(Effective age / Economic life) x Cost
(Cost / Effective age) + Economic life
(Cost - Economic life) / Effective age
(Economic life / Effective age) - Cost

The correct answer is: (Effective age / Economic life) x Cost

The formula for calculating depreciation using the economic age-life method is (Effective age / Economic life) x Cost. This means the effective age is divided by the economic life, and then multiplied by the cost. Option B is incorrect because it adds the economic life to the cost, rather than dividing it by the effective age. Option C is incorrect because it subtracts the economic life from the cost, rather than dividing it by the effective age. Option D is incorrect because it divides the economic life by the effective age and then subtracts the cost, which is not the correct formula for this method of depreciation.