Real Estate Math
A Massachusetts property has an annual NOI of $84,000. If the capitalization rate is 7%, what is the estimated value?
A$1,000,000
B$1,200,000✓ Correct
C$1,400,000
D$840,000
Explanation
Value = NOI ÷ Cap Rate = $84,000 ÷ 0.07 = $1,200,000. To solve this, multiply the relevant values: $84,000 at 7%.. The correct answer is $1,200,000.. This is a common calculation on the Massachusetts real estate exam.
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