Real Estate Math
A commercial property with an NOI of $125,000 is offered at a 7% cap rate. What is the asking price?
A$875,000
B$1,250,000
C$1,785,714✓ Correct
D$2,000,000
Explanation
Asking Price = NOI ÷ Cap Rate = $125,000 ÷ 0.07 = $1,785,714. To solve this, multiply the relevant values: $125,000 at 7%.. The correct answer is $1,785,714.. This is a common calculation on the Arizona real estate exam.
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