Real Estate Math

A Vermont commercial property has a list price of $1,200,000. An investor's analysis requires a 8% cap rate. If the property's NOI is $88,000, what should the investor offer?

A$1,100,000✓ Correct

B$1,200,000

C$1,000,000

D$1,050,000

Explanation

Investor's value = NOI ÷ Cap rate = $88,000 ÷ 0.08 = $1,100,000.

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