Real Estate Math
A property earns $24,000 in net annual income. If the cap rate is 6%, what is the estimated value?
A$300,000
B$400,000✓ Correct
C$360,000
D$480,000
Explanation
Value = NOI ÷ Cap Rate = $24,000 ÷ 0.06 = $400,000. To solve this, multiply the relevant values: $24,000 at 6%.. The correct answer is $400,000.. This is a common calculation on the Arkansas real estate exam.
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