Property Valuation
A Georgia commercial property has potential gross income of $120,000, vacancy and credit loss of 8%, and operating expenses of $40,000. Using the income approach with a cap rate of 9%, what is the estimated value?
A$782,222✓ Correct
B$892,000
C$933,333
D$980,000
Explanation
Effective Gross Income = $120,000 − ($120,000 × 8%) = $120,000 − $9,600 = $110,400. NOI = $110,400 − $40,000 = $70,400.
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