Property Valuation
A Michigan commercial property has a net operating income of $90,000. Using a cap rate of 7.5%, what is the estimated value?
A$1,000,000
B$1,200,000✓ Correct
C$675,000
D$900,000
Explanation
Value = NOI / Cap Rate. $90,000 / 0.075 = $1,200,000. The capitalization rate method is the primary income approach technique for valuing commercial real estate.
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