Real Estate Math
A Kansas apartment building has 10 units renting for $700/month each. Annual vacancy is 8%. Annual operating expenses total $30,000. Using a 7.5% cap rate, what is the estimated value?
A$630,400✓ Correct
B$837,200
C$842,000
D$876,000
Explanation
Annual gross = 10 × $700 × 12 = $84,000. Vacancy loss = $84,000 × 0.08 = $6,720. EGI = $77,280. NOI = $77,280 - $30,000 = $47,280. Value = $47,280 ÷ 0.075 = $630,400. Closest: $775,200.
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