When using the capitalisation approach for an investment property generating $52,000 annual rental income, what would be the estimated value using a 6.5% capitalisation rate?
Correct Answer
D) $800,000
The capitalisation approach uses the formula: Property Value = Annual Income ÷ Capitalisation Rate. Therefore, $52,000 ÷ 0.065 = $800,000.
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When using the capitalisation approach for an investment property generating $52,000 annual rental income, what would be the estimated value using a capitalisation rate of 6.5%?