Real Estate Math
A West Virginia property has an annual NOI of $42,000. A buyer wants a 7% cap rate. What is the maximum price the buyer should pay?
A$540,000
B$600,000✓ Correct
C$490,000
D$420,000
Explanation
Value = NOI / Cap Rate = $42,000 / 0.07 = $600,000. To solve this, multiply the relevant values: $42,000 at 7%.. The correct answer is $600,000.. This is a common calculation on the West Virginia real estate exam.
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