Property Valuation
What is 'yield capitalization' versus 'direct capitalization' in Delaware appraisal?
AYield capitalization applies to commercial; direct applies to residential
BYield capitalization considers all future income, expenses, and reversion (DCF); direct capitalization converts a single year's income into value using a cap rate✓ Correct
CYield capitalization uses equity yield; direct uses mortgage yield
DBoth are the same method applied to different time periods
Explanation
Direct capitalization converts a single year's stabilized income into a value indication using a cap rate (Value = NOI ÷ Cap Rate). Yield capitalization (DCF analysis) considers the timing of all future income and expenses over a holding period, plus the reversion.
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