Real Estate Math
A Hawaii property has a cap rate of 6% and an NOI of $96,000. A buyer wants to purchase it at a 7% cap rate. What price would the buyer pay?
AA. $1,600,000✓ Correct
BB. $1,371,429
CC. $1,500,000
DD. $672,000
Explanation
At buyer's desired 7% cap rate: Value = NOI / Cap Rate = $96,000 / 0.07 = $1,371,429.
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