Real Estate Math
A property generates annual net income of $36,000 and is purchased for $450,000. What is the overall (cap) rate?
A6%
B7%
C8%✓ Correct
D9%
Explanation
Cap Rate = NOI / Value = $36,000 / $450,000 = 0.08 = 8%. Using the values given ($36,000, $450,000), apply the appropriate formula.. The correct answer is 8%.. This is a common calculation on the North Carolina real estate exam.
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