Real Estate Math
A Michigan commercial building has a NOI of $72,000 per year and a cap rate of 8%. What is the estimated value?
A$576,000
B$900,000✓ Correct
C$720,000
D$864,000
Explanation
Value = NOI ÷ Cap Rate = $72,000 ÷ 0.08 = $900,000. To solve this, multiply the relevant values: $72,000 at 8%.. The correct answer is $900,000.. This is a common calculation on the Michigan real estate exam.
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