Ask Question
11 July, 19:07

An office building has a potential gross income of $12,600 per year. The vacancy rate is 5% and the annual expenses are $3,600. What is the market value if the capitalization rate is 12%?

+5
Answers (1)
  1. 11 July, 20:49
    0
    The answer is $69750.00

    Explanation

    Calculation of market value using income approach is calculated as follows;

    Value = Net operating income (NOI) / Cap rate

    Net Operating Income (NOI) is potential rental income plus any additional property-related income minus vacancy losses minus total operating expenses.

    Value = [12600 - (12600*0.05) - 3600] / 0.12

    Value = $69759
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “An office building has a potential gross income of $12,600 per year. The vacancy rate is 5% and the annual expenses are $3,600. What is the ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers