Calculate the building cap rate

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Reference no: EM131852362

Harry decides to purchase an apartment building as an investment. He pays $6,000,000 for the building. The building has a net income of $150,000, annual depreciation $150,000, annual taxes of $75,000, and annual interest payments of $105,000.

a. Calculate the building’s cap rate.

b. One year later, the price of the building goes up to $7,000,000. Calculate the new cap rate.

Reference no: EM131852362

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