CFA Practice Question

There are 195 practice questions for this study session.

CFA Practice Question

A small office building that recently sold for $175,000 generates annual net operating income of $21,000. What is the implied capitalization rate for this property?

A. 8.7%
B. 10.8%
C. 12.0%
Correct Answer: C

The implied capitalization rate is NOI/Price = $21,000/$175,000 = 12%.

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