Property Valuation
In the income approach, Effective Gross Income (EGI) is calculated as:
AGross potential income minus vacancy and collection losses✓ Correct
BNet operating income plus debt service
CTotal rent collected plus operating expenses
DGross potential income divided by capitalization rate
Explanation
Effective Gross Income = Potential Gross Income - Vacancy and Collection Losses + Miscellaneous Income. EGI represents the realistic income a property can be expected to generate, accounting for vacancies and uncollected rents.
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