Final answer:
The formula for calculating Annual Net Operating Income (income capitalization) is: Annual Net Operating Income = Gross Income – Operating Expenses.
Step-by-step explanation:
The formula for calculating Annual Net Operating Income (income capitalization) is:
Annual Net Operating Income = Gross Income – Operating Expenses
Gross Income is the total amount of income generated by a property, including rental income, fees, and other sources of revenue. Operating expenses include costs such as property taxes, insurance, maintenance, and utilities.
For example, if a property generates $100,000 in gross income and has $30,000 in operating expenses, the Annual Net Operating Income would be $100,000 - $30,000 = $70,000.