Property Valuation
A property manager reports the following: Gross potential income $120,000; Vacancy 5%; Operating expenses $40,000. What is the NOI?
A$80,000
B$74,000✓ Correct
C$114,000
D$34,000
Explanation
EGI = $120,000 × 95% = $114,000. NOI = $114,000 − $40,000 = $74,000. To solve this, multiply the relevant values: $120,000 and $40,000 at 5%.. The correct answer is $74,000.. This is a common calculation on the Alabama real estate exam.
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