Real Estate Math

A commercial property has an NOI of $72,000 and is valued using a 6.5% cap rate. What is its value?

A$1,000,000
B$1,107,692✓ Correct
C$900,000
D$1,200,000

Explanation

Value = NOI / Cap Rate = $72,000 / 0.065 = $1,107,692.

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