Real Estate Math
If a property's NOI is $52,000 and it is purchased at a 6.5% cap rate, what is the purchase price?
A$800,000✓ Correct
B$338,000
C$780,000
D$866,667
Explanation
Value = NOI ÷ Cap Rate = $52,000 ÷ 0.065 = $800,000. To solve this, multiply the relevant values: $52,000 at 6.5%.. The correct answer is $800,000.. This is a common calculation on the Tennessee real estate exam.
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