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%
Why This Is the Correct Answer
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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