Property Valuation
When using the income approach, potential gross income minus vacancy and credit losses equals:
ANet operating income
BEffective gross income✓ Correct
CCash flow before taxes
DCapitalized value
Explanation
Effective Gross Income (EGI) = Potential Gross Income − Vacancy and Credit Losses. EGI represents the income the property is expected to actually collect after accounting for vacancies and non-payment.
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- A comparable property sold for $310,000. It has one more bathroom than the subject. The market value of a bathroom is $8,000. The adjusted sale price of the comparable is:
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