Property Valuation
A capitalization rate in real estate investment is calculated as:
AGross income ÷ property value
BNet operating income ÷ property value✓ Correct
CProperty value ÷ net operating income
DAnnual debt service ÷ net operating income
Explanation
Cap Rate = Net Operating Income ÷ Property Value. It represents the rate of return on a real estate investment property based on the income the property is expected to generate.
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