Real Estate Math
An income property has an NOI of $84,000. Comparable properties are selling at a 7% cap rate. What is the estimated value?
A$588,000
B$1,200,000✓ Correct
C$840,000
D$1,200,000
Explanation
Value = NOI ÷ Cap Rate = $84,000 ÷ 0.07 = $1,200,000. The capitalization rate converts an income stream into a value estimate.
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