Which formula represents the Income Approach for investment property?

The Income Approach for valuing investment property focuses on the relationship between income generated from the property and its overall value. In this approach, the formula indicates that the net operating income (NOI) of the property is equal to its market value multiplied by the capitalization rate (cap rate). This equation is fundamental in real estate investment analysis, as it helps investors determine how much they should pay for a property based on its income-generating potential.

Using the formula, an investor can rearrange it to find market value when given the NOI and cap rate: Market value = NOI / cap rate. This relationship showcases how the cap rate, which reflects the expected rate of return on an investment relative to its income, can be applied to assess the value of the property in the context of its ability to generate income.

The other formulas presented, while useful in various contexts of real estate valuation, do not represent the Income Approach specifically. For instance, calculations involving land value and depreciation relate more closely to the Cost Approach, which focuses on the cost to replace a property rather than its income-producing capability. The formula relating previous value to current value through expenses doesn't align directly with the methodology of valuing investment properties. Similarly, the formula involving net rent and property size touches