Property Valuation
Effective gross income (EGI) in the income approach is calculated as:
APotential gross income minus operating expenses
BPotential gross income minus vacancy and collection losses✓ Correct
CNet operating income plus operating expenses
DGross rent multiplied by the capitalization rate
Explanation
Effective Gross Income = Potential Gross Income − Vacancy and Collection Loss. It represents the realistic income a property actually receives before deducting operating expenses.
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