Real Estate Math
A property in Bismarck has a net operating income of $42,000 and is valued at $525,000. What is the capitalization rate?
A6%
B7%
C8%✓ Correct
D9%
Explanation
Cap rate = NOI / Value = $42,000 / $525,000 = 0.08 = 8%. Using the values given ($42,000, $525,000), apply the appropriate formula.. The correct answer is 8%.. This is a common calculation on the North Dakota real estate exam.
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