Real Estate Math
A Pennsylvania commercial property produces a 9% cap rate and the NOI is $63,000. What is the property value?
A$567,000
B$700,000✓ Correct
C$630,000
D$693,000
Explanation
Value = NOI ÷ Cap Rate = $63,000 ÷ 0.09 = $700,000. The income capitalization formula (V = I ÷ R) is fundamental for valuing income-producing properties. Knowing any two variables allows solving for the third.
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