Property Valuation
A capitalization rate (cap rate) in Rhode Island real estate investing is used to:
ACalculate the property's assessed value for tax purposes
BConvert a property's income stream into a value estimate✓ Correct
CDetermine the maximum mortgage amount a buyer can obtain
DCalculate the annual property tax owed
Explanation
The capitalization rate converts an income stream (NOI) into a value estimate (NOI / Cap Rate = Value). It reflects the expected return and risk profile of the investment.
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