Property Valuation
A property generates $60,000 in annual net operating income. If the prevailing cap rate is 6%, what is the estimated value?
A$360,000
B$600,000
C$1,000,000✓ Correct
D$3,600,000
Explanation
Using the income approach: Value = NOI ÷ Cap Rate = $60,000 ÷ 0.06 = $1,000,000. To solve this, multiply the relevant values: $60,000 at 6%.. The correct answer is $1,000,000.. This is a common calculation on the Arizona real estate exam.
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