Real Estate Math
A commercial property has an NOI of $45,000 and a cap rate of 9%. What is its estimated value?
A$450,000
B$500,000✓ Correct
C$540,000
D$600,000
Explanation
Value = NOI ÷ Cap Rate = $45,000 ÷ 0.09 = $500,000. To solve this, multiply the relevant values: $45,000 at 9%.. The correct answer is $500,000.. This is a common calculation on the Arkansas real estate exam.
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