Property Valuation
In the income approach, 'effective gross income' (EGI) is calculated as:
ANOI plus operating expenses
BPotential gross income minus vacancy and credit loss✓ Correct
CTotal income minus mortgage payments
DNet income plus depreciation
Explanation
EGI = Potential Gross Income (PGI) − Vacancy and Credit Loss Allowance. EGI represents the income the property realistically expects to collect, accounting for vacant units and tenants who don't pay.
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