Property Valuation
A property generates $72,000 in net operating income. Comparable properties in the market have a 7.2% cap rate. What is the estimated value?
A$518,400
B$750,000
C$1,000,000✓ Correct
D$900,000
Explanation
Value = NOI ÷ Cap Rate = $72,000 ÷ 0.072 = $1,000,000. To solve this, multiply the relevant values: $72,000 at 7.2%.. The correct answer is $1,000,000.. This is a common calculation on the Massachusetts real estate exam.
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