Basic Appraisal Procedures Income Capitalization Approach Chapter 9 Exam Questions and Answers Latest Update
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Basic Appraisal Procedures Income Capitalization
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Basic Appraisal Procedures Income Capitalization
Basic Appraisal Procedures Income Capitalization Approach Chapter 9 Exam Questions and Answers Latest Update
Value - Answers Income/Rate
Value - Answers Income x Multiplier
80,000 - Answers A property that produces an income stream of $10,000. Let's multiply that by 8. What is the value?
Renta...
Basic Appraisal Procedures Income Capitalization Approach Chapter 9 Exam Questions and Answers
Latest Update
Value - Answers Income/Rate
Value - Answers Income x Multiplier
80,000 - Answers A property that produces an income stream of $10,000. Let's multiply that by 8. What
is the value?
Rental - Answers Gross rent or income
Capitalization Rates - Answers Value = Income/Capitalization Rate
NOI - Answers Net Operating Income
EBITDA - Answers Earnings Before Interest, Taxes, Depreciation, and Amortization
Income capitalization approach - Answers A set of procedures through which an appraiser derives a
value indication for an income producing property by converting its anticipated benefits (cash flows and
reversion) into property value.
One year's income expectancy can be capitalized at a market-derived capitalization rate or at a
capitalization rate that reflects a specified income patten, returns on investment, and change in the
value of the investment - Answers Two ways to convert the anticipated benefits into property values.
When appraising small residential income properties - Answers When is a multiplier typically used?
Monthly figure - Answers Gross rent
Annual figure - Answers Gross income
$57,600 - Answers If I rented each unit of a six-unit building for $800 a month, how much would the
gross income be?
Capitalization rate - Answers Any rate used to convert income into value.
Direct capitalization - Answers A method used to convert an estimate of a single year's income
expectancy into an indication of value in one direct step, either by dividing the net income estimate by
an appropriate capitalization rate or by multiplying the income estimate by an appropriate factor.
A single year's income - Answers How much income is used to calculate the direct capitalization?
$391,476 - Answers What if the income was $48,543 and the appropriate capitalization rate was 12.4%?
How much is the indicated value?
Overall capitalization rate - Answers Income rate for a total real property reflects the relationship
between a single year's NOI expectancy and the total property price or value.
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