Q3 An apartment building is expected to generate the following income: NOI Depreciation BTCFO BTCF from sale Year 1 15,000 3,500 3,000 140,000 Year 2 15,500 3,500 4,000 Year 3 Year 4 14,900 15,070 3,500 3,500 5,000 6,000 The initial investment (acquisition price) is $180,000 and the investor will finance the purchase with a fixed-rate mortgage loan of 150,000 at 6.36% interest rate for 25 years. a. What is the capitalization rate (Cap Rate) on this investment? Show your work. b. If the ongoing cap rate for similar properties in the same market is 7.9%, what is the implied market value of this property? Is the asking price above the implied market value