Question

Using the income approach to estimate the value of a property, an appraiser assigns a capitalization rate of 12 percent. The property has annual net operating income of $57,600. What is the estimated value? Select one:

a. $425,000
b. $64,512
c. $480,000
d. $691,200

Answer 1

Using the income approach with a net operating income of $57,600 and a capitalization rate of 12 percent, the estimated value of the property is $480,000.

Step-by-step explanation:

The question involves using the income approach to estimate the value of a property. To find the estimated value of a property with an annual net operating income of $57,600 and a capitalization rate of 12 percent, you would use the following formula:

Value = Net Operating Income / Capitalization Rate

Plugging the given numbers into the formula, we get:

Value = $57,600 / 0.12 = $480,000

Therefore, the estimated value of the property is $480,000.