Given the Following Information, Calculate the Going-In Capitalization Rate for the Specific

question 5

Multiple Choice

Given the following information, calculate the going-in capitalization rate for the specific property. First-year NOI: $87,750, Acquisition price: $1,250,000, Equity Investment: 35%; Before-tax cash flow: $53,500.

• A) 4.3%
• B) 7.0%
• C) 10.8%
• D) 20.1%

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Definitions:

Alternative Dispute Resolution

A collection of processes such as mediation and arbitration used to resolve conflicts outside of traditional court litigation.

Negotiation

In regard to dispute settlement, a process in which parties attempt to settle their dispute without going to court, with or without attorneys to represent them. In regard to negotiable instruments, the transfer of an instrument in such a way that the transferee (the person to whom the instrument is transferred) becomes a holder.

Neutral Third Party

A third party without any interest or bias in the outcome of a negotiation, dispute, or legal matter, whose role is to assist in reaching a fair resolution.

Settlement

An agreement reached between parties in a dispute, before or after legal action, that resolves the issues.