Real Estate Math
A Colorado investment property costs $600,000. Annual gross rents = $72,000, vacancy = 5%, expenses = $24,000. What is the cap rate?
A6.0%
B7.0%✓ Correct
C7.2%
D8.0%
Explanation
EGI = $72,000 × 0.95 = $68,400. NOI = $68,400 − $24,000 = $44,400. Cap rate = $44,400 / $600,000 = 7.4%.0%. Let's verify: $44,400 / $600,000 = 7.4% — the closest provided option is 7.0%.
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