Property Valuation
The income approach to value is based on the principle that a property's value is related to:
AIts replacement cost minus depreciation
BThe present value of the future income it is expected to produce✓ Correct
CComparable sales in the neighborhood
DThe original purchase price plus capital improvements
Explanation
The income approach estimates value by capitalizing the property's net operating income (NOI), reflecting the idea that an investor would pay based on the income stream the property generates.
Related Arkansas Property Valuation Questions
- A leased fee interest represents:
- Physical deterioration that can be corrected at a cost that is less than the resulting increase in value is called:
- The capitalization rate (cap rate) is calculated by dividing:
- Capitalization rate (cap rate) is defined as:
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- Which appraisal principle holds that value is created by the expectation of future benefits?
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