Property Valuation
A Vermont apartment building has a net operating income of $90,000 per year. If the capitalization rate for similar properties in the area is 7.5%, what is the indicated value using the income approach?
A$675,000
B$900,000
C$1,200,000✓ Correct
D$1,500,000
Explanation
Value = Net Operating Income ÷ Capitalization Rate = $90,000 ÷ 0.075 = $1,200,000.
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