Real Estate Math
A Rhode Island commercial property generates $120,000 annual NOI. If it sells for $1,500,000, what is the cap rate?
A6%
B7%
C8%✓ Correct
D9%
Explanation
Cap Rate = NOI / Value = $120,000 / $1,500,000 = 0.08 = 8%. Using the values given ($120,000, $1,500,000,), 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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