Real Estate Math
A commercial building in NYC is valued at $5,000,000 with a 4.5% cap rate. What is the annual NOI?
A$22,222
B$225,000✓ Correct
C$450,000
D$2,250
Explanation
NOI = Value × Cap Rate = $5,000,000 × 4.5% = $5,000,000 × 0.045 = $225,000. To solve this, multiply the relevant values: $5,000,000 at 4.5%.. The correct answer is $225,000.. This is a common calculation on the New York real estate exam.
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