Question

An investment property is appraised at 400,000 based on a net income of 36000 and a 9 percent capitalization rate. The value of the property based on a 12 percent capitalization rate would be.

Answer 1

The value of the property based on a 12 percent capitalization rate would still be $400,000.

Step-by-step explanation:

To calculate the value of the property based on a 12 percent capitalization rate, we can use the formula:

Value = Net income / Capitalization rate

Using the given information:

Net income = $36,000

Capitalization rate = 9%

Value = $36,000 / 9% = $400,000

Therefore, the value of the property based on a 12 percent capitalization rate would still be $400,000.