Real Estate Math
A Connecticut commercial property generates $320,000 in gross rent annually. The expenses are 45% of gross rent. The cap rate is 9%. What is the estimated value?
A$1,955,556✓ Correct
B$1,600,000
C$1,422,222
D$1,777,778
Explanation
Expenses = $320,000 × 45% = $144,000. NOI = $320,000 - $144,000 = $176,000. Value = $176,000 ÷ 0.09 = $1,955,556.
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