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property has Gross Scheduled Income of $100,000. The vacancy rate and credit rate allowance is 3% whereas Operating expenses are $34,000. a) What will be the Cap. Rate if you purchased the property for $600,000

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Answer:

The answer is "[tex]10.5\%[/tex]"

Explanation:

Following are the Cap rate:

 [tex]= \frac{(Income \times (1 - vacancy\ rate) - operating \ expense)}{\text{purchase price of property}}[/tex]

[tex]= \frac{(\$ 100,000 \times 0.97 - \$ 34,000)}{\$ 600,000}\\\\= \frac{\$ 63,000}{ \$ 600,000}\\\\= 10.5\%[/tex]

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