Real Estate Math

A Missouri property earns $42,000 NOI. The investor wants a minimum 7% return. What is the maximum price?

A$500,000
B$550,000
C$600,000✓ Correct
D$700,000

Explanation

Maximum price = NOI ÷ Cap rate = $42,000 ÷ 0.07 = $600,000.

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