Real Estate Math
A duplex has monthly rents of $1,200 per unit. Annual operating expenses are $8,400. Using an 8% cap rate, what is the estimated value?
A$255,000✓ Correct
B$208,500
C$180,000
D$300,000
Explanation
Annual Gross Income = 2 × $1,200 × 12 = $28,800. NOI = $28,800 – $8,400 = $20,400. Value = NOI / Cap Rate = $20,400 / 0.08 = $255,000.
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