A Property That Is Similar to One That You Are

question 46

Multiple Choice

A property that is similar to one that you are considering buying has just sold for $393,000 and you estimate that it has an NOI of $70,000. Based on this information, what is the cap rate?

• A)10.39%
• B)12.03%
• C)15.92%
• D)17.81%
• E)18.71%

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Definitions:

Equilibrium Price

The cost at which the amount of a product or service sought by buyers matches the amount offered by sellers, leading to a balanced market situation.

Average Total Cost

Average total cost is the total cost of production divided by the total quantity produced, representing the cost per unit of output.

Marginal Cost

The swell in aggregate expenditure tied to the creation of an extra unit of a product or service.

Average Variable Cost

The variable cost (cost that changes with production volume) per unit of output, calculated by dividing total variable costs by the number of units produced.