Real Estate Math
Using the income approach, a NJ office building with a NOI of $85,000 is valued at $1,062,500. What cap rate was applied?
A6.5%
B7.0%
C8.0%✓ Correct
D7.5%
Explanation
Cap Rate = NOI ÷ Value = $85,000 ÷ $1,062,500 = 0.08 = 8.0%. Using the values given ($85,000, $1,062,500), apply the appropriate formula.. The correct answer is 8.0%.. This is a common calculation on the New Jersey real estate exam.
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