Property Valuation
A capitalization rate of 7% applied to an NOI of $42,000 produces an estimated value of:
A$294,000
B$450,000
C$600,000✓ Correct
D$735,000
Explanation
Value = NOI / Cap Rate = $42,000 / 0.07 = $600,000. The capitalization rate reflects the investor's required return and the risk associated with the investment.
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