Real Estate Math
A Bellevue office building produces $1.2M in EGI. The expense ratio is 35%. At a 6% cap rate, the building is worth:
A$11,500,000
B$13,000,000✓ Correct
C$13,333,333
D$14,000,000
Explanation
NOI = $1,200,000 × (1 − 0.35) = $1,200,000 × 0.65 = $780,000. Value = $780,000 ÷ 0.06 = $13,000,000.
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