Property Valuation
When a North Dakota property's income is capitalized at a lower cap rate, the resulting value is:
ALower
BHigher✓ Correct
CUnchanged
DAlways equal to the cost approach value
Explanation
Value = NOI / Cap Rate. A lower cap rate in the denominator produces a higher value for the same income. Lower cap rates reflect lower risk or higher desirability, resulting in buyers paying more per dollar of income.
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