Which method converts an estimate of a single year’s income into value in one direct step?

The method that converts an estimate of a single year's income into value in one direct step is known as Direct Capitalization. This approach simplifies the valuation process by applying a capitalization rate to a single year's net income, allowing appraisers to derive the value of the property directly from its income-generating potential.

In Direct Capitalization, the formula used is typically:

Value = Net Operating Income (NOI) / Capitalization Rate

This method is particularly useful for properties with stable income streams, as it effectively provides a snapshot of the property’s overall worth based on its current financial performance during that specific year.

In contrast, other methods like Yield Capitalization and Discounting involve more complex calculations that may require multiple years’ worth of income or consider the time value of money more comprehensively. Yield Capitalization often takes into account projected income over several years and incorporates growth assumptions, while Discounting uses a series of cash flows and discounts them back to present value, making it a more intricate process than Direct Capitalization. Residual Calculation, on the other hand, is different in its approach, focusing on determining the value of land or property by first estimating what the property could yield after development or improvement expenses. Therefore, the straightforward nature of Direct Capitalization makes