Property Valuation
In the income capitalization approach, if a property's net operating income (NOI) is $60,000 and the capitalization rate is 6%, what is the property's estimated value?
A$360,000
B$600,000
C$1,000,000✓ Correct
D$1,200,000
Explanation
Value = NOI ÷ Cap Rate. $60,000 ÷ 0.06 = $1,000,000. The cap rate represents the required rate of return for the investor.
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