Property Valuation
An Arizona property produces a Net Operating Income (NOI) of $120,000 per year. Using a capitalization rate of 6%, what is the estimated value?
A$720,000
B$1,200,000
C$2,000,000✓ Correct
D$1,800,000
Explanation
Value = NOI / Cap Rate. $120,000 / 0.06 = $2,000,000. The income capitalization formula directly converts income into an estimate of value.
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