Real Estate Math
A Montana commercial property has an NOI of $85,000 and is appraised at a cap rate of 6.5%. What is the indicated value?
A$1,100,000
B$1,253,846
C$1,307,692✓ Correct
D$1,500,000
Explanation
Value = NOI ÷ Cap Rate = $85,000 ÷ 0.065 = $1,307,692. To solve this, multiply the relevant values: $85,000 at 6.5%.. The correct answer is $1,307,692.. This is a common calculation on the Montana real estate exam.
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