Property Valuation
In the income approach for a West Virginia apartment building, 'potential gross income' minus 'vacancy and credit losses' equals:
ANet operating income
BEffective gross income✓ Correct
CCash flow after debt service
DGross rent multiplier
Explanation
Effective Gross Income (EGI) = Potential Gross Income - Vacancy and Credit Losses. EGI represents the income the property is expected to actually collect, accounting for unrented units and uncollected rent.
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