Real Estate Math
A Nebraska farm of 640 acres produces $180,000 net income annually. Using a 4.5% cap rate, the farm's value is:
A$3,600,000
B$4,000,000✓ Correct
C$4,500,000
D$8,100,000
Explanation
Value = NOI ÷ Cap Rate = $180,000 ÷ 0.045 = $4,000,000. Agricultural cap rates tend to be lower, reflecting the stability and long-term appreciation of Nebraska farmland.
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