A property has $10M NOI. If the market cap rate moves from 5.0% to 5.5%, what happens to value?

How to answer

At 5.0%: $10M / 0.05 = $200M. At 5.5%: $10M / 0.055 ≈ $181.8M (~$182M). That's roughly a $18M, or about -9%, decline in value — from just a 50 bps cap-rate move. It shows how sensitive RE values are to small cap-rate shifts.

Key idea: Divide NOI by each cap rate; ~$200M vs ~$182M.