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defon
3 years ago
8

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

erty using the income approach?
Business
1 answer:
Evgesh-ka [11]3 years ago
8 0

Answer: $275,000

Explanation:

Given that,

Annual net income = $22,000

Capitalization rate = 8%

Value of the property = ?

Capitalization rate = \frac{Net\ operating\ income}{Current\ property\ value}

                        8% = \frac{22,000}{Current\ property\ value}

Value of the property = \frac{22,000\times100}{8}

                                    = $275,000

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