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Question 13 11 point) Which of the following statements regarding capitalization rates is FALSE? The...

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Question 13 11 point) Which of the following statements regarding capitalization rates is FALSE? The summation method of determining the capitalization rate is a reliable method since the risk premiums can be accurately estimated. Although it may be difficult to find a large number of comparable properties, the market-determined capitalization rate is widely used and is recommended by the appraising profession. The weighted average method is the traditional way of determining the capitalization rate in corporate finance by implicitly recognizing that the expected total return on investment must satisfy the return expected of both debt holders and shareholders. In the direct capitalization model. we can rely on the existing or expected NOI for the first year of operation if we assume that this NOI is representative of future years. Page 15 of 28 Previous Page Next Page

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