Real Estate Math
A property's NOI is $54,000 per year. A comparable property recently sold at a 7.5% cap rate. Using the income approach, what is this property's estimated value?
A$405,000
B$720,000✓ Correct
C$675,000
D$540,000
Explanation
Value = NOI ÷ Cap Rate = $54,000 ÷ 0.075 = $720,000. The income approach formula is V = I ÷ R (Value = Income ÷ Rate).
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