Real Estate Math
A Vermont property has an NOI of $45,000 and a cap rate of 7.5%. What is the indicated value?
A$540,000
B$600,000✓ Correct
C$337,500
D$675,000
Explanation
Value = NOI ÷ Cap Rate = $45,000 ÷ 0.075 = $600,000. This is the basic income capitalization formula used in the income approach to appraisal.
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