Real Estate Math
A building has a net operating income of $48,000 and is valued using a 7.5% cap rate. What is the estimated value?
A$480,000
B$560,000
C$640,000✓ Correct
D$720,000
Explanation
Value = NOI ÷ Cap Rate = $48,000 ÷ 0.075 = $640,000. To solve this, multiply the relevant values: $48,000 at 7.5%.. The correct answer is $640,000.. This is a common calculation on the Rhode Island real estate exam.
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