Real Estate Math
A Connecticut property generates annual net income of $38,500 after all expenses. At a market cap rate of 7.7%, what is the property's estimated value?
A$500,000✓ Correct
B$487,013
C$525,000
D$450,000
Explanation
Value = NOI ÷ Cap rate = $38,500 ÷ 0.077 = $500,000. To solve this, multiply the relevant values: $38,500 at 7.7%.. The correct answer is $500,000.. This is a common calculation on the Connecticut real estate exam.
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