79. Which is the correct formula for finding the value of a property using a capitalization rate? (a) Net Operating Income x Rate = Value (b) Net Operating Income / Rate = Value (c) Potential Gross Income / Rate = Value (d) Rate / Net Operating Income = Value
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Annual gross potential rental income = $800,000 Annual property operating expenses = $200,000 Annual vacancy and collection losses = $125,000 Capitalisation rate = 10% Expected rate of inflation = 4% Using the direct capitalisation approach, the property’s estimated value would be: - A. $11,875,000 B. $4,750,000 C. $6,000,000 D. $6,750,000
Matthew W.
Suppose that you are attempting to value an income-producing property using the direct capitalization approach. Using data from comparable properties, you have determined the overall capitalization rate to be 7.5%. If the projected first-year net operating income (NOI) for the subject property is $135,500, what is the indicated value of the subject using direct capitalization? A) $150,555.56 B) $9,033,333.33 C) $1,806,666.67 D) $144,985.00.
Jennifer S.
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