Real Estate Math
A property in Rhode Island has a NOI of $80,000 and is purchased for $1,000,000. What is the overall capitalization rate?
A7%
B8%✓ Correct
C9%
D10%
Explanation
Cap Rate = NOI / Value = $80,000 / $1,000,000 = 0.08 = 8%. Using the values given ($80,000, $1,000,000), apply the appropriate formula.. The correct answer is 8%.. This is a common calculation on the Rhode Island real estate exam.
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