Property Management
An Indiana apartment complex's net operating income is $185,000. If the debt service is $140,000, what is the annual cash flow before taxes?
A$25,000
B$45,000✓ Correct
C$140,000
D$185,000
Explanation
Cash flow before taxes = NOI − Debt Service = $185,000 − $140,000 = $45,000. Using the values given ($185,000, $140,000,), apply the appropriate formula..
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Key Terms to Know
Net Operating Income (NOI)
The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Math Concepts
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