Real Estate Math
A Vermont property has a net operating income of $22,000 per year. Using a 5.5% capitalization rate, what is the estimated value?
A$364,000
B$380,000
C$400,000✓ Correct
D$440,000
Explanation
Value = NOI / Cap Rate = $22,000 / 0.055 = $400,000. To solve this, multiply the relevant values: $22,000 at 5.5%.. The correct answer is $400,000.. This is a common calculation on the Vermont real estate exam.
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