Property Valuation
In the income capitalization approach, the capitalization rate is determined by:
AThe mortgage interest rate only
BMarket analysis of comparable sales and their NOI relationships✓ Correct
CThe state property tax rate
DThe buyer's desired return on investment
Explanation
Cap rates are derived from market data by dividing the NOI of comparable sold properties by their sale prices, reflecting what investors are paying for a given income stream in that market.
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