Real Estate Math
A Washington investor wants to buy a retail strip mall that generates $480,000 NOI. The cap rate for comparable properties is 6.5%. What is the indicated value?
A$6,900,000
B$7,200,000
C$7,384,615✓ Correct
D$7,800,000
Explanation
Value = $480,000 ÷ 0.065 = $7,384,615. To solve this, multiply the relevant values: $480,000 at 6.5%.. The correct answer is $7,384,615.. This is a common calculation on the Washington real estate exam.
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