How does the Overall Age-Life Method determine depreciation?

The Overall Age-Life Method is a technique used in real estate appraisal to estimate the depreciation of a property based on its age and the economic life assigned to it. This method relies on the concept of straight-line depreciation, which assumes that an asset loses value at a constant rate over time.

In practical terms, the method involves assessing the property's effective age—how old it appears in terms of its condition and usability—along with its estimated total economic life, which is the period during which the property is expected to generate income or utility. By comparing the effective age to the total economic life, appraisers can determine a percentage of depreciation that reflects how much value the property has lost compared to its initial worth.

Given this understanding, the correct answer highlights the use of straight-line depreciation and the assignment of economic life as fundamental to how the Overall Age-Life Method quantifies depreciation. This approach is straightforward and widely accepted in property valuation, providing a clear framework for appraisers to analyze a property's value over time.