Property Valuation
A property's stabilized NOI is $78,000. If the cap rate is 7.5%, what is the indicated value?
A$1,040,000✓ Correct
B$585,000
C$780,000
D$960,000
Explanation
Value = NOI ÷ Cap Rate = $78,000 ÷ 0.075 = $1,040,000. To solve this, multiply the relevant values: $78,000 at 7.5%.. The correct answer is $1,040,000.. This is a common calculation on the Alabama real estate exam.
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