Real Estate Math
A property has a NOI of $60,000. A buyer wants a 7.5% return. What is the maximum price the buyer should pay?
A$450,000
B$700,000
C$800,000✓ Correct
D$600,000
Explanation
Value = NOI / Cap Rate = $60,000 / 0.075 = $800,000. To solve this, multiply the relevant values: $60,000 at 7.5%.. The correct answer is $800,000.. This is a common calculation on the Arizona real estate exam.
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