Property Management
A capitalization rate of 8% applied to a Louisville apartment building with a NOI of $80,000 indicates a value of:
A$640,000
B$800,000
C$1,000,000✓ Correct
D$1,200,000
Explanation
Value = NOI ÷ Cap Rate = $80,000 ÷ 0.08 = $1,000,000. To solve this, multiply the relevant values: $80,000 at 8%.. The correct answer is $1,000,000.. This is a common calculation on the Kentucky real estate exam.
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