A Wyoming investment property generates monthly rents of $3,500. The annual operating expenses total $14,400 and the vacancy rate is 5%. What is the annual NOI?

Explanation

Annual PGI = $3,500 × 12 = $42,000. Vacancy loss = $42,000 × 5% = $2,100. EGI = $42,000 − $2,100 = $39,900. NOI = $39,900 − $14,400 = $25,500. Let me verify: $3,500 × 12 = $42,000; $42,000 × 0.95 = $39,900; $39,900 − $14,400 = $25,500. The correct answer is $25,500, but closest option is $25,800. Using $3,600/mo: $3,600 × 12 = $43,200 × .95 = $41,040 − $14,400 = $26,640 ≈ $26,700. Annual NOI = EGI − Operating Expenses = ($3,500 × 12 × 0.95) − $14,400 = $39,900 − $14,400 = $25,500.