Real Estate Math
A New York building has a net operating income of $216,000. An appraiser determines the cap rate is 7.2%. What is the estimated market value?
A$2,500,000
B$2,800,000
C$3,000,000✓ Correct
D$3,500,000
Explanation
Value = NOI / Cap Rate = $216,000 / 0.072 = $3,000,000. To solve this, multiply the relevant values: $216,000 at 7.2%.. The correct answer is $3,000,000.. This is a common calculation on the New York real estate exam.
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