Property Valuation
In the income approach, effective gross income (EGI) is calculated as:
ANOI plus operating expenses
BPotential gross income minus vacancy and credit loss✓ Correct
CNOI divided by the cap rate
DTotal rent collected in the prior year
Explanation
EGI = Potential Gross Income (PGI) − Vacancy and Credit Losses + Other Income. It represents the income the property is reasonably expected to generate, accounting for typical vacancy rates and uncollectible rents.
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