Property Valuation
An appraiser using the income approach for a Las Vegas strip mall estimates annual gross income of $420,000, operating expenses of $168,000, and applies a cap rate of 7%. What is the estimated value?
A$3,600,000✓ Correct
B$6,000,000
C$2,520,000
D$4,285,714
Explanation
Net Operating Income (NOI) = Gross Income − Operating Expenses = $420,000 − $168,000 = $252,000. Value = NOI ÷ Cap Rate = $252,000 ÷ 0.
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