Real Estate Math
A NJ investor purchases a $400,000 property with a 5% cap rate. After improvements, the NOI increases from $20,000 to $26,000. If cap rates remain at 5%, what is the new property value?
A$480,000
B$520,000✓ Correct
C$440,000
D$500,000
Explanation
New value = New NOI ÷ Cap Rate = $26,000 ÷ 0.05 = $520,000.
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