Real Estate Math
A commercial property has an annual NOI of $54,000. If the cap rate for similar properties is 6.75%, what is the estimated value?
A$740,000
B$790,000
C$800,000✓ Correct
D$816,000
Explanation
Value = NOI ÷ Cap Rate = $54,000 ÷ 0.0675 = $800,000. To solve this, multiply the relevant values: $54,000 at 6.75%.. The correct answer is $800,000.. This is a common calculation on the Iowa real estate exam.
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