FinanceQuestion 78 of 100
A property has a net operating income of $24,000 and sold for $300,000. What is the capitalization rate?
a.8%
b.6%
c.10%
d.12%
Explanation
The capitalization rate equals net operating income divided by value: $24,000 / $300,000 = 0.08, or 8%. Cap rate is used to estimate value and compare income properties. A higher cap rate generally indicates higher risk or a lower price relative to income.
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