A property's net operating income is $12,000 per year. If an investor wants a 12% rate or return, how much is the property worth to him?
A. $1,440
B. $100,000
C. $144,000
D. $1,000,000
Answer: B. $100,000
Use the capitalization formula (Income / Capitalization Rate = Value) to find a property's value : $12,000 net income / .12 rate of return = $100,000 value.
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