Real Estate Math
A commercial building has an NOI of $95,000 per year. If investors in this market require a 7.5% cap rate, what is the indicated value?
AA. $1,125,000
BB. $1,266,667✓ Correct
CC. $712,500
DD. $950,000
Explanation
Value = NOI ÷ Cap Rate = $95,000 ÷ 0.075 = $1,266,667.
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