Question

The property fetches a net annual income of Rs. 900/- deducting all outgoings. What is the capitalized value of property if the ROI is 6% per annum?
1. Rs. 16000
2. Rs. 18000
3. Rs. 15000
4. Rs. 12000

Answer 1

Correct Answer - Option 3 : Rs. 15000

Concept:

Capitalized value

It is the amount of money whose annual interest at the highest prevailing rate of interest will be equal to the net income from the property.

To determine the capitalized value of a property, it is required to know the net income from the property and the highest prevailing rate of interest.

Net annual income = Capitalized value of property × ROI/100

Calculation:

Given;

Net annual income = 900

ROI = 6%

From the above equation:

900 = Capitalized value of property × 6/100

Capitalized value of property = 15000