Which of the following represents the house price fundamental value?
A) The simple sum of its future rental income.
B) The price a house would sell at if interest rates were zero.
C) The present value of its expected future rental income.
D) The price a house would sell at in the midst of a rational bubble.
E) The product of all future rental income payments multiplied together.

Question

Quizplus · Accepted Answer

The present value of its expected future rental income represents the house price fundamental value because it takes into account the time value of money and the expected future cash flows from the rental income. The other options do not consider these factors and are therefore not accurate representations of the house price fundamental value.

Which of the Following Represents the House Price Fundamental Value