Property Valuation
An Alaskan property with an NOI of $75,000 is valued at $1,000,000. The overall capitalization rate is:
A5%
B7.5%✓ Correct
C10%
D12.5%
Explanation
Cap rate = NOI ÷ Value. $75,000 ÷ $1,000,000 = 0.075 = 7.5%. Using the values given ($75,000, $1,000,000), apply the appropriate formula.. The correct answer is 7.5%.. This is a common calculation on the Alaska real estate exam.
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