Real Estate Math
A commercial property has an NOI of $72,000. If similar properties are selling at a 7.5% cap rate, what is the indicated market value?
A$540,000
B$960,000✓ Correct
C$720,000
D$1,080,000
Explanation
Value = NOI ÷ Cap rate = $72,000 ÷ 0.075 = $960,000. To solve this, multiply the relevant values: $72,000 at 7.5%.. The correct answer is $960,000.. This is a common calculation on the Arizona real estate exam.
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