Real Estate Math
A Missouri apartment building has gross income of $96,000, vacancy of 7%, operating expenses of $38,000, and a cap rate of 8%. The estimated value is:
A$675,000
B$641,000✓ Correct
C$720,000
D$760,000
Explanation
EGI = $96,000 x (1-0.07) = $96,000 x 0.93 = $89,280. NOI = $89,280 - $38,000 = $51,280. Value = NOI / Cap Rate = $51,280 / 0.08 = $641,000. Closest is $675,000 but exact = $641,000. Rounding: approximately $640,000. The choices suggest a calculation difference; using $51,280/0.08 = $641,000.
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