A residential building has an NOI of $400,000. Cap rates for similar properties are 5%. A tenant paying $500/month vacates. If the landlord renovates and increases this rent to $1,000/month including utilities, how much value is created?

Select one:

a.

$96,000

b.

$10,000

c.

$50,000

d.

$240,000

e.

$120,000