Property Valuation
In the income approach, which formula is used to estimate property value?
AValue = NOI × Cap Rate
BValue = NOI ÷ Cap Rate✓ Correct
CValue = GRM × Monthly Rent
DValue = Cost × Depreciation Factor
Explanation
The capitalization formula is: Value = Net Operating Income (NOI) ÷ Capitalization Rate. A lower cap rate produces a higher value, reflecting investor confidence in the property's income stream.
Related Alabama Property Valuation Questions
- Which of the following BEST defines 'market value'?
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