Property Management
The capitalization rate used to value an income-producing property in West Virginia reflects:
AThe property's mortgage interest rate
BThe relationship between net operating income and market value✓ Correct
CThe owner's desired cash-on-cash return
DThe property tax rate
Explanation
The capitalization rate (cap rate = NOI / Value) reflects the relationship between a property's net operating income and its market value. It represents the unleveraged return an investor would receive and is used to convert income into an estimate of value.
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