Answered

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If a building generates [tex]$\[tex]$72,000$[/tex][/tex] of NOI and has a cap rate of [tex]8\%[/tex], what is the value of this building?

Sagot :

GinnyAnswer
Certainly! To determine the value of the building based on the Net Operating Income (NOI) and the capitalization rate (cap rate), follow these steps:

1. Understand the formula: The value of a building can be calculated using the formula:
[tex]\[ \text{Value} = \frac{\text{NOI}}{\text{Cap Rate}} \][/tex]

2. Identify the given values:
- The Net Operating Income (NOI) is [tex]$\$[/tex]72,000$.
- The capitalization rate (cap rate) is [tex]$8\%$[/tex], which can be written as a decimal: [tex]$0.08$[/tex].

3. Substitute the values into the formula:
[tex]\[ \text{Value} = \frac{72,000}{0.08} \][/tex]

4. Perform the division:
[tex]\[ \text{Value} = 900,000 \][/tex]

Therefore, the value of the building is \$900,000.
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