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charle [14.2K]
3 years ago
8

Property A is a self storage facility with a going cap rate of 6.0%. Property B is an office building with a going cap rate of 6

.0%. If both properties produce the same NOI, which property is worth more...?
Business
1 answer:
hjlf3 years ago
3 0

Answer:

Worth of both the property will be same.

Explanation:

Data provided in the question:

Cap rate for the Property A which is a self storage capacity = 6%

Cap rate for the Property B which is an office building = 6%

NOI of both the buildings are equal

Now,

Mathematically,

Cap rate is given as = [ NOI ] ÷ [ Worth of the property ]

or

Worth of the property =  [ NOI ] ÷ [ Cap rate ]

Since, the NOI and cap rate for both the buildings are same

Therefore,

Worth of both the property will be same.

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