Property Valuation
An appraiser in Virginia determines a property's value using the income approach. The property generates $30,000 net operating income and the cap rate is 6%. What is the value?
A$180,000
B$300,000
C$420,000
D$500,000✓ Correct
Explanation
Value = NOI ÷ Cap Rate = $30,000 ÷ 0.06 = $500,000. The income capitalization approach divides net operating income by the capitalization rate.
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