If the cap rates prevailing in a given market are 10.5%, then how much would you expect a property to sell for in that market if its annual net income were $50,000?

Question

Quizplus · Accepted Answer

The cap rate is calculated by dividing the annual net income by the property value. To find the property value, you divide the annual net income ($50,000) by the cap rate (10.5%), which equals $476,190.

If the Cap Rates Prevailing in a Given Market Are