Real Estate Math
An investor in Alaska is offered a property for $650,000. The property generates an NOI of $52,000. What is the cap rate?
A7.0%
B7.5%
C8.0%✓ Correct
D8.5%
Explanation
Cap rate = NOI ÷ Value. $52,000 ÷ $650,000 = 0.08 = 8.0%. Using the values given ($650,000, $52,000), apply the appropriate formula.. The correct answer is 8.0%.. This is a common calculation on the Alaska real estate exam.
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