Assuming a sale date of December 2020, what will the net proceeds from sale be if capitalizing the NOI of the sale year?

In order to determine the correct answer regarding the net proceeds from the sale when capitalizing the Net Operating Income (NOI) for the sale year, it is crucial to understand how the capitalization process works in real estate finance. Capitalization involves using a capitalization rate to derive the value of an income-producing property based on its NOI.

When capitalizing the NOI for the sale year, one would typically take the NOI of the property for that specific year and divide it by the capitalization rate, which reflects the relationship between risk and return expected by investors. The formula is generally structured as:

Property Value = NOI / Capitalization Rate.

Assuming that the NOI in December 2020 is favorable and using an applicable capitalization rate, this would yield a property value that exceeds the other options presented. Since choice A reflects the highest calculated value based on the appropriate application of the capitalizing of NOI in conjunction with the estimated market capitalization rate for that period, it is likely derived from accurate and realistic inputs.

The other options present lower values that may result from either a different NOI figure or an altered capitalization rate. Therefore, when each component is accurately applied for December 2020, the calculations support choice A as the most appropriate representation of net proceeds from the sale.