Answer: $275,000
Explanation:
Given that,
Annual net income = $22,000
Capitalization rate = 8%
Value of the property = ?
Capitalization rate = [tex]\frac{Net\ operating\ income}{Current\ property\ value}[/tex]
8% = [tex]\frac{22,000}{Current\ property\ value}[/tex]
Value of the property = [tex]\frac{22,000\times100}{8}[/tex]
= $275,000
