Real Estate Math
An investor receives $18,500/year in NOI from a property purchased at a 7.4% cap rate. What did they pay for the property?
A$225,000
B$237,500
C$250,000✓ Correct
D$270,000
Explanation
Purchase price = NOI ÷ Cap Rate = $18,500 ÷ 0.074 = $250,000. To solve this, multiply the relevant values: $18,500 at 7.4%.. The correct answer is $250,000.. This is a common calculation on the South Carolina real estate exam.
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