$\begin{array}{rrr}
\begin{array}{l}
\
Price\
Effective ~gross ~income \
\% ~operating ~expense\
\mathrm{NOl}\
\end{array}
\begin{array}{rrr}
\text { Comp 1 } & \text { Comp 2 } & \text { Comp 3 } \
\hline \$ 300,000 & \$ 350,000 & \$ 375,000 \
50,000 & 55,000 & 60,000 \
50 \% & 55 \% & 54 \% \
25,000 & 30,000 & 32,500
\end{array}
\end{array}$
-Consider the table above. Assume that the subject property has effective gross income of $53,000 and a NOI of $27,500. What value would a cap rate approach yield rounded to the nearest $100)?

Question

Quizplus · Accepted Answer

The cap rate approach value is calculated by dividing the NOI by the cap rate. The cap rate is typically derived from comparable sales data. In this case, we do not have comparable sales data, so we will use the average cap rate of the three companies in the table. The average cap rate is (50% + 55% + 54%) / 3 = 53%. Therefore, the cap rate approach value is $27,500 / 0.53 = $328,600.

-Consider the Table Above