Kalyn invests in an office complex. She pays $1,200.000 for the building. The building will bring net income of $80,000, annual depreciation of $30,000, annual taxes of $24,000, and annual interest payments of $24,000. What is the building's cap rate?

Kalyn invests in an office complex. She pays $1,200.000 for the building. The building will bring net income of $80,000, annual depreciation of $30,000, annual taxes of $24,000, and annual interest payments of $24,000. What is the building's cap rate?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 9FPE

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Question

What is the building s cap rate ? Solve this question general Accounting

Kalyn invests in an office complex. She pays
$1,200.000 for the building. The building will
bring net income of $80,000, annual
depreciation of $30,000, annual taxes of
$24,000, and annual interest payments of
$24,000. What is the building's cap rate?

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