Real Estate Math
A property has a net operating income of $48,000 per year. Using a capitalization rate of 8%, what is the estimated value?
A$480,000
B$540,000
C$600,000✓ Correct
D$640,000
Explanation
Value = NOI ÷ Cap Rate = $48,000 ÷ 0.08 = $600,000. To solve this, multiply the relevant values: $48,000 at 8%.. The correct answer is $600,000.. This is a common calculation on the Delaware real estate exam.
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