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. � � <br /> COST APPROACH TO VALUE <br /> Not Applicable <br /> INCOME APPROACH <br /> The capitalization rate of 11. 6� was derived frvm the <br /> Decatur mark�t place by determining what local lenders <br /> would charge for a 75$ mortgage on subject property and <br /> estimating wt�at a prudent owner would require of his 25$ <br /> equity invest:ment. Several local lenders were contacted <br /> regarding moY•tgaqe rates and the rate amount quoted ranged <br /> from 10. 5$ to 12�, thus an appropriate rate of 11$ was <br /> judged to be representative for our Income Approach to <br /> Value. <br /> Mortgage constant at 11� rate for 15 year term is 12.78 <br /> -- 75$ x 12 . 78 = 9.59 <br /> Assuming a typical prudent owner would want a 8� return on <br /> his 25� investment: <br /> 25$ x 8� = 2. 00 <br /> Therefore: <br /> 9.59 <br /> + 2 .00 <br /> 11.59 or Capitalization Rate of 11. 6� (rounded) <br /> We will now calculate the total Income Approach formula as <br /> follows: <br /> Projected Gross Rental Income (Estimated) $ 10,920 <br /> Less Projected Expenses (Estimated) (S 3,2761 <br /> Estimated Net Effective Income $ 7, 644 <br /> $ 7, 644 11. 6$ _ $ 65,897 <br /> Estimate of Value via lncome Approach to Value = $ 66, 000 <br /> (Rounded) <br />