What term describes a law indicating that the added value of an additional feature is less than the actual cost incurred?

The correct answer is the term that describes the phenomenon where the financial benefit gained from an additional feature or improvement to a property is less than the cost incurred to add that feature. This concept is analyzed in the context of real estate to determine whether investments in additional features or upgrades are financially viable.

Diminishing returns specifically refers to this situation where, beyond a certain point, the incremental improvements or added value do not justify the expense. For example, if a homeowner spends a considerable amount renovating a kitchen, the increased property value may not fully reflect the investment made.

In contrast, the other terms refer to different concepts in real estate. The gross rent multiplier relates to the relationship between a property's price and its rental income. Effective gross income considers total income from a property, factoring in vacancies and collections. The discount rate is used in present value calculations to determine how much future cash flows are worth today. These concepts do not apply to the scenario concerning the value of additional features relative to their costs.