Real Estate Math
A Missouri rental property has an annual net operating income (NOI) of $21,000. An investor requires an 8% return (cap rate). What is the maximum price the investor should pay for this property?
A$168,000
B$210,000
C$262,500✓ Correct
D$280,000
Explanation
Value = NOI ÷ Cap rate = $21,000 ÷ 0.08 = $262,500.
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