Projected Year NOI Projected Year NOI Projected Year resale

Question

Projected Year 1 NOI: $100,000.
Projected Year 11 NOI: $121,899.
Projected Year 10 resale (reversion) value: $1,523,738.
Current (going-in) market cap rate for similar properties: 7%.

What is the projected terminal (going-out) cap rate?
(a) 6.56%.
(b) 7.00%.
(c) 8.00%.
(d) 10%.
(e) Insufficient information to determine answer.

Answer

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