Real Estate Math
A Wyoming property has an NOI of $56,000 and a cap rate of 8%. If the cap rate decreases to 7%, what happens to the estimated value?
AValue decreases from $700,000 to $800,000
BValue increases from $700,000 to $800,000
CValue stays the same since NOI didn't change
DValue decreases from $800,000 to $700,000✓ Correct
Explanation
At 8% cap rate: Value = $56,000 / 0.08 = $700,000.
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