What is the yield of a property that has a net operating income of $180,000 and a value of $2,400,000?

What is the yield of a property that has a net operating income of $180,000 and a value of $2,400,000?

• A. 0.06
• B. 0.065
• C. 0.07
• D. 0.075

Answer: (D)

To determine the yield of a property, you can use the formula: Yield = Net Operating Income (NOI) / Property Value In this case, the net operating income is $180,000, and the property value is $2,400,000. Plugging these values into the formula: Yield = $180,000 / $2,400,000 = 0.075 This calculation results in a yield of 0.075, which indicates that the property’s return on investment, based on its net operating income relative to its value, is 7.5%. This yield is important because it helps investors assess the potential profitability of the property compared to other investment opportunities. A higher yield generally suggests a better return on investment, all else being equal. This figure is typically expressed in percentage terms, so it can also be represented as 7.5%. The other options provided reflect yields that do not accurately calculate based on the given information, confirming that the correct answer is indeed the yield of 0.075, or 7.5%.

To determine the yield of a property, you can use the formula:

Yield = Net Operating Income (NOI) / Property Value

In this case, the net operating income is $180,000, and the property value is $2,400,000. Plugging these values into the formula:

Yield = $180,000 / $2,400,000 = 0.075

This calculation results in a yield of 0.075, which indicates that the property’s return on investment, based on its net operating income relative to its value, is 7.5%. This yield is important because it helps investors assess the potential profitability of the property compared to other investment opportunities. A higher yield generally suggests a better return on investment, all else being equal. This figure is typically expressed in percentage terms, so it can also be represented as 7.5%.

The other options provided reflect yields that do not accurately calculate based on the given information, confirming that the correct answer is indeed the yield of 0.075, or 7.5%.