Real Estate Math
A Virginia investor buys a 6% cap rate property for $800,000. If market cap rates compress to 5%, what is the new value (assuming NOI unchanged)?
A$960,000✓ Correct
B$1,000,000
C$1,050,000
D$900,000
Explanation
NOI = $800,000 × 6% = $48,000. New value = $48,000 ÷ 5% = $960,000.
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