Real Estate Math
A Virginia commercial property has an effective gross income of $180,000, operating expenses of $72,000, and a cap rate of 7%. What is the estimated value?
A$1,028,571
B$1,080,000
C$1,542,857✓ Correct
D$2,571,429
Explanation
NOI = EGI − Expenses = $180,000 − $72,000 = $108,000. Value = NOI ÷ Cap Rate = $108,000 ÷ 0.07 = $1,542,857.
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