Certified Residential Appraiser Practice Exam

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Study for the Certified Residential Appraiser Exam. Use flashcards and multiple choice questions with hints and explanations. Ensure you're ready for your certification!

Practice this question and more.

What is the value if the income is $7,000 and the rate is 7%?

$70,000
$100,000
$120,000
$140,000

The correct answer is: $100,000

To determine the value based on the given income and rate, you can apply the formula used in the income approach to valuation, which is: Value = Income / Rate In this scenario, the income is $7,000, and the rate is 7%, or 0.07 when expressed as a decimal. Plugging these values into the formula: Value = $7,000 / 0.07 Calculating this gives: Value = $100,000 Thus, the value derived from an income of $7,000 at a rate of 7% is indeed $100,000. This approach is fundamental in real estate appraisal, as it allows appraisers to calculate the worth of properties based on their income-generating potential, reflecting a direct relationship between income, rate, and value.