Argus Enterprise Practice Test

When calculating the resale value of a property using the Capitalize Net Operating Income (NOI) method, the correct approach involves determining the property's value based on its ability to generate income. The primary formula utilized is the capitalized value, which is found by dividing the NOI by the capitalization rate (Cap Rate).

The formula (NOI / Cap Rate) gives you the total value of the property based on the income it generates. Selling costs then need to be accounted for since they impact the net amount that the seller would actually receive from a sale. Thus, subtracting selling costs from the capitalized value accurately reflects the potential proceeds from the sale.

This understanding reveals that while some of the other choices might incorporate elements of NOI or Cap Rate, they do not correctly represent the final calculation needed to determine the resale value after accounting for selling costs.