Property Valuation
A property generates annual net operating income (NOI) of $60,000. Using a capitalization rate of 8%, the estimated value using the income approach is:
A$480,000
B$600,000
C$750,000✓ Correct
D$960,000
Explanation
The income approach formula is: Value = NOI ÷ Cap Rate. $60,000 ÷ 0.08 = $750,000. This approach is most applicable for income-producing properties such as apartment buildings and commercial real estate.
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