What is the net operating income of a property valued at $495,000 with operating expenses of $25,000 and a capitalization rate of 10%?

To determine the net operating income (NOI) of a property, you can use the relationship between property value, capitalization rate, and NOI. The formula to find the NOI from the capitalization rate and property value is:

NOI = Property Value × Capitalization Rate

In this case, the property is valued at $495,000 and the capitalization rate is 10%, or 0.10 when expressed as a decimal. Therefore, the calculation for NOI is:

NOI = $495,000 × 0.10 = $49,500

This figure represents the income generated by the property before deducting operating expenses. Since the operating expenses are provided as $25,000, these would typically be subtracted from the gross income if calculating cash flow, but they do not affect the calculation of NOI, which focuses specifically on income generation relative to property value.

The correct choice reflects the calculated NOI, which is essential for understanding the financial performance of the property within the context of real estate investment.