Real Estate Math
A Utah investor uses a cap rate of 7.5% and needs a minimum annual cash flow of $18,000 after debt service. If debt service is $25,000/year, what minimum NOI is required?
A$43,000✓ Correct
B$18,000
C$25,000
D$36,000
Explanation
Required NOI = Required Cash Flow + Debt Service = $18,000 + $25,000 = $43,000. To solve this, multiply the relevant values: $18,000 and $25,000 at 7.
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