Real Estate Math
A property generates $4,500 per month in rent. The cap rate for similar properties is 7.5%. What is the estimated value using the income approach?
A$680,000
B$720,000✓ Correct
C$700,000
D$660,000
Explanation
Annual income: $4,500 × 12 = $54,000. Value = NOI ÷ Cap rate = $54,000 ÷ 0.075 = $720,000 (assuming no expenses for simplicity in this problem).
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