Real Estate Math
A property's NOI is $84,000 and the cap rate is 6%. What is the estimated value using the income approach?
A$1,200,000
B$1,400,000✓ Correct
C$1,500,000
D$1,600,000
Explanation
Value = NOI ÷ Cap Rate = $84,000 ÷ 0.06 = $1,400,000. To solve this, multiply the relevant values: $84,000 at 6%.. The correct answer is $1,400,000.. This is a common calculation on the Hawaii real estate exam.
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