Property Valuation
The capitalization rate (cap rate) in real estate appraisal represents:
AThe borrower's annual interest rate
BThe relationship between NOI and property value (NOI divided by Value)✓ Correct
CThe percentage of gross income spent on maintenance
DThe tax rate applied to investment property
Explanation
The cap rate is NOI divided by property value (or sale price). It reflects the expected rate of return on the investment, helping appraisers and investors compare properties.
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