Property Valuation
Under the income approach, effective gross income (EGI) is calculated as:
AGross potential income minus expenses
BGross potential income minus vacancy and collection losses✓ Correct
CNet operating income plus depreciation
DTotal revenue minus mortgage payments
Explanation
EGI = Gross Potential Income (GPI) − Vacancy & Collection Losses. EGI represents the income the property actually collects, accounting for unoccupied units and uncollected rents.
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