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You have an opportunity to buy an office building for $125,000 that produces an annual NOI of $10,000. You can obtain an 80% loan from

You have an opportunity to buy an office building for $125,000 that produces an annual NOI of $10,000. You can obtain an 80% loan from a bank with a 7% interest rate and amortized for 30 years. Your required investor cash on cash return is 12%. You will have to put 20% of the purchase down. What is the value of the office building?

A. $140,999 B. $118,242 C. $113,895 D. $125,000

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