Property Valuation
A Louisiana appraiser uses the 'band of investment' technique to estimate a capitalization rate. This technique considers:
AThe average of tax assessments in the area
BThe weighted average of the return requirements for the mortgage component and equity component of the investment✓ Correct
CThe historical appreciation rate of the property
DThe property's income relative to land cost only
Explanation
The band of investment technique derives an overall capitalization rate by computing the weighted average of the mortgage constant (debt component) and the equity capitalization rate (equity component), reflecting how the typical investor finances a property.
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