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A property is valued at $300,000 with a 5% capitalization rate (cap rate). If the prospective buyer wants an 8% return on their money, the property’s valued would be ____

A $187,500.

The value will move in the opposite direction as the capitalization rate (cap rate).
$300,000 x .05 = $15,000 (net income)
$15,000 ÷ .08 = $187,500

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