Property Valuation
In Kansas, when a commercial property is valued using direct capitalization, which of the following formulas is correct?
ACap Rate = Property Value × NOI
BProperty Value = NOI ÷ Cap Rate✓ Correct
CNOI = Property Value ÷ Cap Rate
DCap Rate = NOI × Property Value
Explanation
Direct capitalization: Property Value = NOI ÷ Cap Rate. This formula directly converts a single year's NOI into a value estimate using the appropriate market cap rate.
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