Real Estate Math
A property generates annual NOI of $45,000. The investor requires a 9% return. What is the maximum price the investor should pay?
A$400,000
B$450,000
C$500,000✓ Correct
D$550,000
Explanation
Maximum price = NOI ÷ Required cap rate = $45,000 ÷ 0.09 = $500,000. To solve this, multiply the relevant values: $45,000 at 9%.. The correct answer is $500,000.. This is a common calculation on the Idaho real estate exam.
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