Property Valuation
An appraiser is estimating the value of a Kentucky commercial building. The effective gross income (EGI) is calculated as:
APotential gross income minus vacancy and collection losses✓ Correct
BNet operating income plus operating expenses
CTotal rents collected plus other income
DGross rents minus mortgage payments
Explanation
Effective Gross Income (EGI) = Potential Gross Income (PGI) minus Vacancy and Collection Losses. EGI represents the realistic income the property can generate after accounting for vacancies and uncollected rents.
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