Real Estate Math
A property has a net operating income (NOI) of $24,000 per year. If the capitalization rate is 8%, what is the estimated value of the property?
A$192,000
B$240,000
C$300,000✓ Correct
D$320,000
Explanation
Value = NOI ÷ Cap Rate = $24,000 ÷ 0.08 = $300,000. This is the income approach to value formula: Value = NOI / Cap Rate.
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