Real Estate Math
A buyer wants to invest in a property with a 9% cap rate. The asking NOI is $63,000. What is the maximum price the buyer should pay?
A$630,000
B$700,000✓ Correct
C$567,000
D$756,000
Explanation
Maximum price = NOI ÷ cap rate = $63,000 ÷ 0.09 = $700,000. To solve this, multiply the relevant values: $63,000 at 9%.. The correct answer is $700,000.. This is a common calculation on the Arkansas real estate exam.
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