Property Valuation Financial AnalysisInvestmentMEDIUM
If a property has a net operating income of $60,000 and sells for $750,000, what is the capitalization rate?
Correct Answer
B) 8%
Cap Rate = Net Operating Income ÷ Sale Price = $60,000 ÷ $750,000 = 0.08 = 8%
Answer Options
A
6%B
8%C
10%D
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Related Topics & Key Terms
Related Topics:
real-estate-math-gross-rent-multiplierreal-estate-mash-cash-on-cash-return
Key Terms:
capitalization ratecap ratenet operating incomeincome approachinvestment property valuation
Related Concepts
IRV stands for Income, Rate, and Value. It represents the relationship between Net Operating Income (I), Capitalization Rate (R), and Property Value (V).
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