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%