Real Estate Math
A property in New York generates gross rental income of $96,000 per year. Operating expenses total $36,000. The capitalization rate is 8%. What is the estimated value?
A$450,000
B$750,000✓ Correct
C$1,200,000
D$1,500,000
Explanation
NOI = Gross Income minus Operating Expenses = $96,000 minus $36,000 = $60,000. Value = NOI divided by Cap Rate = $60,000 divided by 0.08 = $750,000.
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