Real Estate Math
A Virginia property has an annual net operating income (NOI) of $36,000. If the capitalization rate is 8%, what is the property's estimated value?
A$288,000
B$360,000
C$450,000✓ Correct
D$504,000
Explanation
Value = NOI ÷ Cap Rate = $36,000 ÷ 0.08 = $450,000. The income approach formula is Value = Income ÷ Rate.
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