Real Estate Math
A Mississippi investor evaluates a property with an asking price of $450,000. The property generates $45,000 NOI annually. The capitalization rate implied by this asking price is:
A8%
B10%✓ Correct
C12%
D9%
Explanation
Cap Rate = NOI ÷ Value = $45,000 ÷ $450,000 = 0.10 = 10%.
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