Real Estate Math
A New York City apartment building is purchased for $4,200,000. The annual NOI is $294,000. What is the cap rate?
A5%
B6%
C7%✓ Correct
D8%
Explanation
Cap Rate = NOI / Sale Price = $294,000 / $4,200,000 = 0.07 = 7%. Using the values given ($4,200,000, $294,000), apply the appropriate formula.. The correct answer is 7%.. This is a common calculation on the New York real estate exam.
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