Property Valuation
A Nevada property generates $60,000 annual net operating income (NOI). Using a capitalization rate of 6%, the indicated value is:
A$360,000
B$600,000
C$900,000
D$1,000,000✓ Correct
Explanation
Value = NOI ÷ Cap Rate = $60,000 ÷ 0.06 = $1,000,000. The income capitalization approach converts income into value using the formula: Value = Income ÷ Rate.
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