Real Estate Math
A Bellevue commercial property generates a monthly NOI of $18,500. An investor requires a 7% annual return. What is the maximum price the investor should pay?
A$3,171,429✓ Correct
B$2,971,428
C$3,300,000
D$2,640,000
Explanation
Annual NOI = $18,500 × 12 = $222,000. Maximum price = Annual NOI ÷ cap rate = $222,000 ÷ 0.07 = $3,171,428.57, rounded to $3,171,429.
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