Real Estate Math (alternative)
A Maryland commercial property has a stabilized NOI of $120,000 and a cap rate of 6%. The purchase price is:
A$1,200,000
B$1,800,000
C$2,000,000✓ Correct
D$2,400,000
Explanation
Value = NOI ÷ Cap Rate = $120,000 ÷ 0.06 = $2,000,000. To solve this, multiply the relevant values: $120,000 at 6%.. The correct answer is $2,000,000.. This is a common calculation on the Maryland real estate exam.
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