sierrahostetler9665 sierrahostetler9665
  • 03-09-2019
  • Business
contestada

If the annual net income from a commercial property is $22,000, and the capitalization rate is 8%, what is the value of the property using the income approach?

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Dryomys Dryomys
  • 05-09-2019

Answer: $275,000

Explanation:

Given that,

Annual net income = $22,000

Capitalization rate = 8%

Value of the property = ?

Capitalization rate = [tex]\frac{Net\ operating\ income}{Current\ property\ value}[/tex]

                        8% = [tex]\frac{22,000}{Current\ property\ value}[/tex]

Value of the property = [tex]\frac{22,000\times100}{8}[/tex]

                                    = $275,000

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