A property generates a net operating income (NOI) of $45,000. Using a capitalization rate of 9%, what is the estimated value of the property?
Correct Answer
C) $500,000
Using the income capitalization formula: Value = NOI ÷ Cap Rate. $45,000 ÷ 0.09 = $500,000. This formula is used in the income approach to appraisal to estimate the value of income-producing properties.
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A property generates a net operating income (NOI) of $40,000 per year. Using a capitalization rate of 8%, what is the estimated value of the property?
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