Which statement is true regarding Stella's use of the direct capitalization method for valuation?

The direct capitalization method is primarily focused on converting a single year's expected income into a market value estimate. This approach uses the income generated by a property, often determined by net operating income (NOI), and applies a capitalization rate to derive the property's value. This method assumes that the income generated in that single year is representative of future performance, making it a straightforward technique for appraising property value based on income.

In this context, it is important to recognize that the other options do not align with the core principles of the direct capitalization method. For instance, while the method does deal with income, it does not typically take into account the projected resale value or anticipated variations in income over time. The focus remains on providing an immediate valuation based on current income conditions rather than projected future streams or potential changes in the economic landscape. Thus, the chosen statement accurately reflects the essence of the direct capitalization method.