Real Estate Math
A Colorado commercial property has an asking price of $1,500,000 and generates $108,000 in NOI annually. A buyer believes the cap rate should be 7.5% to reflect current market risk. What price would the buyer offer based on their target cap rate?
AA. $1,440,000✓ Correct
BB. $1,440,500
CC. $1,460,000
DD. $1,440,000
Explanation
Buyer's target price = NOI ÷ Buyer's Cap Rate = $108,000 ÷ 0.075 = $1,440,000. To solve this, multiply the relevant values: $1,500,000 and $108,000 at 7.5%.. The correct answer is A. $1,440,000.. This is a common calculation on the Colorado real estate exam.
Related Colorado Real Estate Math Questions
- A rectangular lot measures 150 feet by 200 feet. What is the area in acres? (1 acre = 43,560 sq ft)
- A Colorado broker negotiates a 7% commission on a commercial sale. The total commission is $56,000. What was the sale price of the property?
- A Colorado commercial property has an annual NOI of $120,000. A comparable sold at a 7.5% cap rate. What is the indicated value of the subject property?
- A Colorado triple net (NNN) lease has base rent of $18/sqft plus $4/sqft taxes, $2/sqft insurance, and $3/sqft maintenance on 3,000 sqft. What is the total annual rent?
- A Colorado seller nets $380,000 after paying a 5.5% commission. What was the original sale price?
- A Colorado buyer's loan of $360,000 at 6.5% interest for 30 years has monthly P&I payments of approximately $2,275. How much interest is paid in the first month?
- A Colorado property has depreciated by 22% from its original value of $580,000. What is the current depreciated value?
- Using the income approach: a Colorado commercial property generates $80,000 NOI. Comparable properties sell at a 7% cap rate. What is the property's indicated value?
Practice More Colorado Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Colorado Quiz →