Property Valuation
Capitalization rate (cap rate) is calculated as:
ANet operating income divided by value✓ Correct
BGross income multiplied by an income multiplier
CValue multiplied by net operating income
DEffective gross income minus operating expenses
Explanation
The cap rate is calculated by dividing Net Operating Income (NOI) by the property's value (or purchase price). It is used to evaluate income-producing properties and estimate value using the income approach.
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