Property ValuationIntermediateDelaware Exam
In Delaware, if a capitalization rate is 8% and a property's net operating income is $40,000, what is the estimated value using the income approach?
A$400,000
B$480,000
C$500,000Correct
D$320,000
Why $500,000 Is Correct
Answer C: $500,000
Value = Net Operating Income ÷ Cap Rate = $40,000 ÷ 0.08 = $500,000.
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
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