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Valuing an office building with a cap rate
The prompt
A REIT in Singapore owns an office building with net operating income (NOI) of SGD 5 million a year. Similar buildings trade at a 7 percent cap rate. What is it worth? If interest rates rise and cap rates move to 8 percent, what is it worth, and by how much does the value change in percent?
Your interviewer will share data as you ask for it. Ask clarifying questions, state a hypothesis, then lay out your structure out loud before you calculate.
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