Using the capitalization formula, what would be the value of an asset if the net operating income is $20,000 and the rate of capitalization is 10%?

To determine the value of an asset using the capitalization formula, you can apply the formula:

Value = Net Operating Income (NOI) / Capitalization Rate.

In this scenario, the net operating income is $20,000, and the capitalization rate is 10%, or 0.10 in decimal form. Plugging these values into the formula gives you:

Value = $20,000 / 0.10 = $200,000.

This calculation shows that the asset's value, based on the provided net operating income and capitalization rate, is $200,000. Thus, the correct answer reflects the accurate application of the capitalization formula to assess the value of the asset based on its income-generating potential.