Real Estate Math
A South Dakota property has a cap rate of 8.5% and an NOI of $34,000. What is the estimated value?
A$380,000
B$400,000✓ Correct
C$420,000
D$289,000
Explanation
Value = NOI ÷ Cap Rate = $34,000 ÷ 0.085 = $400,000. To solve this, multiply the relevant values: $34,000 at 8.5%.. The correct answer is $400,000.. This is a common calculation on the South Dakota real estate exam.
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