Given the Following Information, Calculate the Appropriate Going-In Cap Rate

question 17

Multiple Choice

Given the following information, calculate the appropriate going-in cap rate using general constant-growth formula. Overall market discount rate = 12%, Constant growth rate projection: 3% per year, Sale price: $1,950,000, Net operating income: $390,000, Potential gross income: $520,000.

• A) 8%
• B) 9%
• C) 10%
• D) 11.5%

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Definitions:

Sample Mean

The average of all numerical values in a sample subset of a population, used in statistics to estimate the population mean.

Confidence Interval

A span of numbers, taken from sample data, which is expected to include the actual value of a parameter that is unknown for the entire population.

Standard Deviation

A measure of the dispersion or variability of a set of values, indicating how much the values deviate from the mean on average.

Race Car Driver

An individual who competes in race car driving competitions, operating fast cars on various race tracks.