Property Valuation
A property has an NOI of $36,000 and a cap rate of 8%. What is its estimated value?
A$288,000
B$360,000
C$400,000
D$450,000✓ Correct
Explanation
Value = NOI ÷ Cap Rate = $36,000 ÷ 0.08 = $450,000. This is the fundamental income capitalization formula used in the income approach to value.
Related Arkansas Property Valuation Questions
- The principle of conformity holds that:
- A cap rate of 5% versus a cap rate of 10% on the same NOI would indicate:
- Direct capitalization in the income approach converts income into value by:
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- The gross income multiplier (GIM) differs from the GRM in that GIM uses:
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