Girardo Owns a Condominium in Key West The Amount of Depreciation That Girardo May Deduct with Respect

question 85

Multiple Choice

Girardo owns a condominium in Key West.During the year,Girardo uses the condo a total of 22 days.The condo is also rented to vacationers for a total of 78 days and generates rental income of $24,000.Girardo incurs the following expenses before allocation:
$$\begin{array} { l r } \text { Mortgage interest } & \$ 8,000 \\\text { Property taxes } & 3,600 \\\text { Utilities } & 4,000 \\\text { Insurance } & 2,400 \\\text { Depreciation } & 22,000\end{array}$$
The amount of depreciation that Girardo may deduct with respect to the rental property is

• A)$ 7,300
• B)$ 9,960
• C)$14,040
• D)$17,160
• E)$22,000

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Definitions:

Recovery Value

The estimated amount that can be reclaimed from an asset at the end of its useful life.

Convertible Bond

A type of bond that can be converted into a predetermined number of the issuer's stock shares.

Annual Coupon

The yearly interest payment made to bondholders, usually expressed as a percentage of the bond's face value.

Required Rate

Required Rate refers to the minimum return investors expect to receive on an investment, which is influenced by the investment's risk profile and market conditions.