Real Estate Math
An investor in Hawaii purchases a commercial building for $2,000,000. At a 5.5% cap rate, what annual NOI does the building need to generate?
AA. $100,000
BB. $110,000✓ Correct
CC. $120,000
DD. $115,000
Explanation
NOI = Value × Cap Rate = $2,000,000 × 0.055 = $110,000.
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