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If the capitalization rate on a building that produces a $20,000 annual income is 10 percent, what is the estimated value of the building?
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If the capitalization rate on a building that produces a $20,000 annual income is 10 percent, what is the estimated value of the building?

User Molochdaa
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1 Answer

7 votes

Answer:

Value of building = $200,000

Step-by-step explanation:

Provided capitalization rate = 10%

Annual income = $20,000

Estimated value of asset =
(Annual\ Income)/(Capitalization\ Rate)

Since, all the information related to variables used in calculating value are provided we can compute the value of building.

Value of building =
(20,000)/(0.10) = $200,000

User Dvanderb
by
5.0k points
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