Property Valuation
When appraising income-producing property in Missouri, the 'effective gross income' is:
ATotal potential rent at 100% occupancy
BPotential gross income minus vacancy and collection losses✓ Correct
CNet operating income after all expenses
DGross income before depreciation
Explanation
Effective Gross Income (EGI) = Potential Gross Income (PGI) minus vacancy and collection losses. It represents the realistic income expected, accounting for the fact that not all units will be occupied at all times.
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