Property Valuation
In Montana, the 'income capitalization approach' to appraisal converts expected future income into:
AA monthly budget for property operations
BAn indication of present value using the capitalization rate✓ Correct
CThe replacement cost of the improvements
DThe assessed value for tax purposes
Explanation
The income capitalization approach converts expected future income (NOI) into a present value indication of the property by dividing by the appropriate capitalization rate (Value = NOI / Cap Rate). It is the primary approach for income-producing properties.
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