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photoshop1234 [79]
3 years ago
9

Your investor client is interested in looking at commercial property. An available strip mall has an effective gross income of $

112,000 and a net operating income of $84,000. The capitalization rate in the area for similar properties is 12%. What is the likely asking price for the property
Business
1 answer:
Pani-rosa [81]3 years ago
6 0

Answer:

$700,000

Explanation:

Given that

Effective gross income = $112,000

Net operating income = $84,000

Capitalization rate = 12%

So by considering the above information, the asking price for the property is

= Net operating income ÷ Capitalization rate

= $84,000 ÷ 12%

= $700,000

By dividing the net operating income by capitalization rate we can get the asking price for the property

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Explanation:

Note:

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From part b of the attached excel file, we have:

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<h3>What are indirect costs?</h3>

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