CFA Practice Question

There are 139 practice questions for this study session.

CFA Practice Question

Using the following data and the direct capitalization approach, an analyst estimates that the market value of an income-producing property is $2,750,000.

Annual gross potential rental income = $400,000
Annual property operating expenses = $100,000
Annual vacancy and collection losses = $50,000

The capitalization rate used by the analyst to get the market value of the property is:

A. 9.09%.
B. 10.91%.
C. 12.73%.
Correct Answer: A

User Contributed Comments 4

User Comment
Sandy69 250000/2750000 = .09091
pooh2005 400000-100000-50000=250000
250000/5750000=.09091
Oarona pooh2005:You made a typo error in the denominator. it should be 2750000 instead of 5750000
khalifa92 eye of the tige
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