Real Estate Math
A South Carolina property has potential gross income of $72,000. Vacancy is 8%, operating expenses are $22,000, and the cap rate is 9%. What is the estimated value?
A$496,000✓ Correct
B$578,000
C$556,000
D$544,000
Explanation
EGI = $72,000 × (1 - 0.08) = $72,000 × 0.92 = $66,240. NOI = $66,240 - $22,000 = $44,240. Value = $44,240 / 0.09 = $491,556 ≈ nearest answer $496,000. Closest available answer is $496,000.
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