Real Estate Math
A Kansas investor buys a property for $400,000. Annual NOI is $28,000. What is the cap rate?
A5.5%
B7%✓ Correct
C8%
D9%
Explanation
Cap Rate = NOI ÷ Value = $28,000 ÷ $400,000 = 0.07 = 7%. Using the values given ($400,000, $28,000), apply the appropriate formula.. The correct answer is 7%.. This is a common calculation on the Kansas real estate exam.
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