Real Estate Math
A 5-unit Delaware apartment property generates $1,900/month per unit. With 8% vacancy, 40% expense ratio, and an 8% cap rate applied to stabilized NOI, what is the estimated value?
A$786,600✓ Correct
B$1,425,000
C$1,200,000
D$1,052,640
Explanation
Annual Gross = 5 × $1,900 × 12 = $114,000. EGI = $114,000 × (1 − 0.08) = $104,880. NOI = $104,880 × (1 − 0.40) = $62,928. Value = $62,928 ÷ 0.08 = $786,600. NOI = $104,880 − $41,952 = $62,928. Value = $62,928 ÷ 0.08 = $786,600. Note: the $1,316,700 answer would require different inputs. Closest calculated: $786,600. Accept $1,316,700 if based on 5% cap rate or different vacancy: 5 × $1,900 × 12 × 0.92 × 0.60 ÷ 0.048 ≈ varies. Standard calculation yields $786,600.
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