Property Valuation
In the income approach, before applying the cap rate, the appraiser must estimate:
AGross sales price
BNet operating income (NOI)✓ Correct
CThe land-to-building ratio
DAccrued depreciation
Explanation
The income approach formula is Value = NOI ÷ Cap Rate. The appraiser must first estimate the net operating income by projecting gross income, deducting vacancy and operating expenses.
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