1. If a property has a low cap rate implies a property is over valued by the seller.

TRUE OR FALSE

2) If a property has a high cap rate implies a property is undervalued by the seller.

TRUE OR FALSE

3) You are trying to decide between an investment in one of two properties. Property A has the same Net Operating Income as property B. Both properties are identical in all aspects in all dimensions physical and financial except property A has a higher Cap Rate than property B. Property A is undervalued relative to Property B.

TRUE OR FALSE

4) You have found a commercial property that you believe is being underutilized. It is for sale. The cap rate based on the current net operating income and the asking price for the property is 10%. Since you are fairly certain that you can increase NOI by at least 20% per year. It does not make sense to use the cap rate as the discount rate since the discount rate must reflect the investors cost of capital.

TRUE OR FALSE