Real Estate Math
A South Dakota commercial property has an annual NOI of $90,000. If a buyer requires a 9% return on investment (cap rate), what should the buyer pay for the property?
A$810,000
B$900,000
C$1,000,000✓ Correct
D$1,100,000
Explanation
Value = NOI ÷ Cap Rate = $90,000 ÷ 0.09 = $1,000,000.
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