Real Estate Math
A property has an NOI of $45,000 and similar properties in the area have a cap rate of 7.5%. What is the estimated value?
A$337,500
B$600,000✓ Correct
C$450,000
D$337,500
Explanation
Value = NOI ÷ Cap Rate = $45,000 ÷ 0.075 = $600,000. This is the income approach to value using direct capitalization.
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