Solution-Briefly describe the method direct capitalization

Briefly describe the method direct capitalization

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Reference no: EM131731702

Question: A property has a net rent (cash flow or net income) of $1.5m per year and is selling at a cap rate of 8.5%. What is the price of the property? Recalculate the price assuming a 9.75% cap rate and a 7.25% cap rate. [Note: This method of valuing income property, dividing the current net income by the cap rate, is known as direct capitalization, a widely used shortcut valuation method.

Reference no: EM131731702

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Briefly describe the method direct capitalization

Reference no: EM131731702

Reference no: EM131731702

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