Capitalization Rate [0518]

A small office building sold for $200,000.  It has a net operating income of $30,000 and debt service of $20,000.  What is the capitalization rate?

The capitalization rate is calculated using the value (or selling price) and the NOI.

Cap rate = $30,000 ÷ $200,000 = 15%

Debt service is irrelevant to this problem