Real Estate Math
A Rhode Island apartment building has a potential gross income of $120,000/year, a vacancy rate of 5%, and operating expenses of $40,000. What is the net operating income (NOI)?
A$74,000✓ Correct
B$80,000
C$114,000
D$120,000
Explanation
Effective gross income = $120,000 x (1 - 0.05) = $114,000. NOI = $114,000 - $40,000 = $74,000. To solve this, multiply the relevant values: $120,000 and $40,000 at 5%.. The correct answer is $74,000.. This is a common calculation on the Rhode Island real estate exam.
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