A retail property generates annual net rental income of $120,000. Using a market capitalisation rate of 6%, what is the capitalised value of the property?
Correct Answer
B) $2,000,000
Using the capitalisation formula (Net Income ÷ Cap Rate = Value), $120,000 ÷ 0.06 = $2,000,000. This income approach is commonly used for investment properties.
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