Real Estate Math
A Kentucky investor applies a 6.5% cap rate to a commercial property with $78,000 NOI. What is the estimated value?
A$1,100,000
B$1,200,000✓ Correct
C$1,300,000
D$1,400,000
Explanation
Value = NOI ÷ Cap Rate = $78,000 ÷ 0.065 = $1,200,000. To solve this, multiply the relevant values: $78,000 at 6.5%.. The correct answer is $1,200,000.. This is a common calculation on the Kentucky real estate exam.
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