Real Estate Math
A Maine commercial property has a net operating income of $95,000 and a market capitalization rate of 7%. The estimated value is:
A$1,250,000
B$1,357,143✓ Correct
C$665,000
D$950,000
Explanation
Value = NOI ÷ Cap rate = $95,000 ÷ 0.07 = $1,357,143. To solve this, multiply the relevant values: $95,000 at 7%.. The correct answer is $1,357,143.. This is a common calculation on the Maine real estate exam.
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