Reconciliation to Indicated Value by the Income Approach


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question 1 of 3

Judy is considering the purchase of a duplex that is at 100% occupancy. To determine if Judy should make the investment in the duplex, she should have a(n) _____ completed by an appraiser.

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1. Judy is considering the purchase of a duplex that is at 100% occupancy. The sales price is $249,500, and the net income is $24,000. Using the cost approach, I / R = V formula, calculate the value of the duplex. Round percentages to two decimals. Round the final answer to the nearest integer.

2. Should Judy make an investment in the duplex in Question 2? Why or why not?

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About This Quiz & Worksheet

Test your knowledge on the income approach through these practice problems. In addition to key concepts, the questions test you on calculating values using the income approach.

Quiz & Worksheet Goals

This quiz will test you on:

  • When considering buying a duplex what should you have an appraiser complete before investing
  • Calculating the value of a duplex using the income approach
  • Whether a buyer should make a purchase based on the value calculated and the reason for the decision
  • Calculating the values of two properties using the income approach
  • Determining what property to purchase after calculating the value of multiple properties

Skills Practiced

  • Problem solving - use acquired knowledge to solve income approach problems
  • Information recall - access the knowledge you've gained regarding purchasing duplexes
  • Critical thinking - apply relevant concepts of property values to determine what a seller's next actions should be

Additional Learning

The lesson called Reconciliation to Indicated Value by the Income Approach goes into these topics in greater detail. The lesson contains the following:

  • What is the income approach and what does the formula stand for
  • The three steps to completing the formula
  • How to calculate net operating income