Which of the following land valuation methods uses the formula: Income ÷ capitalization rate = value?

The ground rent capitalization method is a recognized approach for valuing land, particularly when evaluating properties that generate income. This method operates on the principle of capitalizing income derived from a property into an estimated value. The formula "Income ÷ capitalization rate = value" clearly illustrates how expected income streams from the property are related to its overall value.

In this context, the capitalization rate reflects the anticipated rate of return on an investment in the property, allowing appraisers to derive a value based on the income that the property is expected to generate. Thus, by using this formula, the appraiser can effectively determine the property's worth based on its income-producing potential.

Other valuation methods mentioned do not utilize this income-based approach. The abstraction method focuses on estimating value by subtracting costs of improvements from the total property value. The allocation method pertains to determining land value by allocating a portion of the total property value based on proportional relationships between land and improvements. The sales comparison method relies on comparing recently sold similar properties to estimate value rather than focusing on potential income generation. Hence, the ground rent capitalization method stands out as the correct choice, specifically for its direct application of income generation to value assessment.