Real Estate Math

A Missouri property generates NOI of $50,000. It is purchased at an 8.5% cap rate. What is the purchase price?

A$425,000
B$500,000
C$588,235✓ Correct
D$625,000

Explanation

Purchase price = NOI ÷ Cap rate = $50,000 ÷ 0.085 = $588,235.

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