Real Estate Math
A property's net operating income is $45,000 and the cap rate is 7.5%. What is the estimated value using the income approach?
A$337,500
B$600,000✓ Correct
C$450,000
D$3,375,000
Explanation
Value = NOI ÷ Cap rate = $45,000 ÷ 0.075 = $600,000. To solve this, multiply the relevant values: $45,000 at 7.5%.. The correct answer is $600,000.. This is a common calculation on the Nebraska real estate exam.
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