A duplex rents for $700 per unit per month. Expenses and vacancies run 30% of gross rents. With a capitalization rate of 6%, what is the value?

Question

Quizplus · Accepted Answer

The correct answer is A because the value of the duplex is $196,000. This is calculated by taking the gross rents ($700 x 2 = $1,400) and subtracting the expenses and vacancies (30% of $1,400 = $420), which gives us a net operating income of $980. We then divide the net operating income by the capitalization rate (6%) to get the value of the duplex ($980 / 0.06 = $196,000).

A Duplex Rents for $700 Per Unit Per Month