Property Valuation
A Rhode Island property generates $60,000 in annual net operating income. If the cap rate for comparable properties is 6%, what is the indicated value?
A$360,000
B$600,000
C$1,000,000✓ Correct
D$3,600,000
Explanation
Using the income approach: Value = NOI / Cap Rate = $60,000 / 0.06 = $1,000,000. To solve this, multiply the relevant values: $60,000 at 6%.. The correct answer is $1,000,000.. This is a common calculation on the Rhode Island real estate exam.
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