Real Estate Math
A Massachusetts property has a net operating income of $95,000 and the cap rate for similar properties is 7.25%. What is the estimated value?
A$1,310,345✓ Correct
B$688,750
C$1,000,000
D$1,250,000
Explanation
Value = NOI ÷ Cap Rate = $95,000 ÷ 0.0725 = $1,310,345. To solve this, multiply the relevant values: $95,000 at 7.25%.. The correct answer is $1,310,345.. This is a common calculation on the Massachusetts real estate exam.
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