Property Valuation
The income capitalization approach values a Missouri property by:
AComparing it to recent sales of similar properties
BEstimating replacement cost minus depreciation
CDividing the net operating income by the capitalization rate✓ Correct
DMultiplying gross rent by the gross rent multiplier
Explanation
The income capitalization approach estimates value by dividing net operating income (NOI) by the capitalization rate: Value = NOI ÷ Cap Rate. It is most commonly used for income-producing properties.
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