Real Estate Math
A Montana investment property costs $450,000 and generates $36,000 annual NOI. What is the cap rate?
A7%
B8%✓ Correct
C9%
D10%
Explanation
Cap Rate = NOI ÷ Value = $36,000 ÷ $450,000 = 0.08 = 8%. Using the values given ($450,000, $36,000), apply the appropriate formula.. The correct answer is 8%.. This is a common calculation on the Montana real estate exam.
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