Real Estate Math
An Arizona property has a potential gross income of $108,000, a 6% vacancy rate, and $36,000 in operating expenses. If properties in the area sell at a 7.5% cap rate, what is the estimated value?
A$840,000
B$952,000
C$903,200
D$880,000✓ Correct
Explanation
EGI = $108,000 × (1 - 0.06) = $101,520. NOI = $101,520 - $36,000 = $65,520. Value = $65,520 ÷ 0.075 = $873,600.
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