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John (a single man) decides to purchase an apartment building as an investment for $6,000,000. The building generates annual net income of $150,000 after deducting
John (a single man) decides to purchase an apartment building as an investment for $6,000,000. The building generates annual net income of $150,000 after deducting the following annual expenses: depreciation $150,000, taxes $75,000, and interest on the loan $105,000.
What is the investment propertys cap rate (capitalization rate)?
Multiple Choice
12.5%
4%
None of the choices are correct.
12%
8%
16%
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