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a) Discuss the pros and cons of income approach to property valuation. Give examples (10 marks) b) A real estate agent is evaluating an apartment
a) Discuss the pros and cons of income approach to property valuation. Give examples (10 marks) b) A real estate agent is evaluating an apartment building using the income approach. She has gathered the following information for an apartment valuation. Gross annual rental income Sh. 670,000 5.5% Operating expenses (% of rental income) Sh. 12,000 Depreciation Insurance and property taxes Sh. 30,000 Income taxes Sh. 28,000 Maintenance Sh. 45,000 Interest on financing Sh. 27,000 Utilities Sh. 32,000 Cap rate 10% Growth rate 3% Required Calculate the value of the apartment. (15 marks)
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