Real Estate Math
A New Mexico property has an NOI of $36,000 and a cap rate of 7.2%. What is the estimated value using the income approach?
A$400,000
B$450,000
C$500,000✓ Correct
D$550,000
Explanation
Value = NOI / Cap Rate = $36,000 / 0.072 = $500,000. To solve this, multiply the relevant values: $36,000 at 7.2%.. The correct answer is $500,000.. This is a common calculation on the New Mexico real estate exam.
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