Property Valuation
In South Dakota, the income capitalization approach converts income into value by:
ADividing net income by the property's purchase price
BDividing net operating income by the capitalization rate✓ Correct
CMultiplying gross rent by the market cap rate
DAdding NOI to the replacement cost
Explanation
The basic income capitalization formula is: Value = NOI ÷ Cap Rate. The cap rate reflects the market's required rate of return for similar investments.
Related South Dakota Property Valuation Questions
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