Math Snap

STEP 1

Assumptions1. The annual net income from the property is $22,000. The capitalization rate is8%
3. The value of the property is calculated using the income approach, which is the net income divided by the capitalization rate

STEP 2

First, we need to find the value of the property using the income approach. We can do this by dividing the net income by the capitalization rate.
$$Property\, value = \frac{Net\, income}{Capitalization\, rate}$$

STEP 3

Now, plug in the given values for the net income and capitalization rate to calculate the property value.
Property\, value = \frac{\($\)22,000}{8\%}

STEP 4

Convert the percentage to a decimal value.
$$8\% =0.08$$Property\, value = \frac{\($\)22,000}{0.08}

Calculate the property value.
Property\, value = \frac{\($\)22,000}{0.08} = \($\)275,000The value of the property using the income approach is $275,000.