Question: Your client asks you to indicate a cap rate for the subject property using the band-of-investments technique, using the following parameters: 80% loan-to-value ratio 3.5%

Your client asks you to indicate a cap rate for the subject property using the band-of-investments technique, using the following parameters:

  • 80% loan-to-value ratio
  • 3.5% interest rate (monthly compounding)
  • 30-year amortization
  • 8% equity dividend rate


What is your cap rate indicated by this technique? 

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