Term
| A home purchased for $200,000 five years ago is now worth $300,000. What are the total appreciation amount, total appreciation rate, and average appreciation rate? |
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Definition
Total appreciation = ($300,000 - $200,000), or $100,000
Total appreciation rate = ($100,000 ÷ $200,000), or 50%
Average annual appreciation rate = 50% ÷ 5 years = 10% |
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Term
| A home costing $250,000 is worth $268,000 one year later. What is the one-year appreciation rate? |
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Definition
| One-year appreciation rate = ($18,000 ÷ 250,000) = 7.2% |
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Term
| A $100,000 property is expected to appreciate 5% each year for the next 3 years. What will be its appreciated value at the end of this period? |
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Definition
| Appreciated value = $100,000 x 1.05 x 1.05 x 1.05 = $115,762.50 |
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Term
| An office building has $200,000 net income and sold for $3,200,000. What was the rate of return? |
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Definition
| Rate = ($200,000 NOI ÷ $3,200,000 price) = 6.25% |
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Term
| An office building has $200,000 net income and a cap rate of 6.25%. What is its value? |
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Definition
| Value = ($200,000 ÷ 6.25%) = $3,200,000 |
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