Property Valuation
The 'market extraction method' for deriving a capitalization rate uses:
APublished cap rate tables from PREC
BNOI and sale prices of comparable income-producing properties to derive the market cap rate✓ Correct
CThe prime rate plus a risk premium
DLender-required cap rates for loan approval
Explanation
Market extraction derives cap rates from the market itself — by dividing the NOI of recently sold comparable income properties by their sale prices. This method reflects actual investor behavior in the local Pennsylvania market and is the most reliable source of cap rate data.
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