What will the net proceeds from a sale amount to if the resale calculation capitalizes the NOI 12 months after the sale?

To determine the net proceeds from a sale when the resale calculation capitalizes the Net Operating Income (NOI) 12 months after the sale, it is important to understand the process of capitalization and how it impacts the sale’s net proceeds.

When you capitalize the NOI, you are converting the NOI into an estimate of value based on a capitalization rate. The net proceeds from the sale will typically include the calculated value from this NOI capitalization, minus any associated costs of sale. The correct answer reflects this process and indicates that when the NOI is capitalized appropriately, factoring in the expected income stream and deducting any selling costs, it results in a net proceeds figure of $3,921,351.

This means that the calculations correctly took into account not just the projected revenue from the property over the next 12 months but also assumed a proper rate of return or capitalization rate that reflects market conditions. Thus, the resulting amount derived from these calculations, in conjunction with assumptions about the selling expenses and other potential deductions, leads to this final figure.

Understanding the mechanics of how NOI is turned into a present value of future income is critical for evaluating the financial outcome of a sale, and the choice of $3,921,351 aligns with these established principles of real