Real Estate Math
An Alaska investor puts $80,000 down on a $400,000 property. After one year, the property is worth $420,000. What is the return on equity (equity appreciation only)?
A5%
B20%
C25%✓ Correct
D40%
Explanation
Appreciation = $420,000 − $400,000 = $20,000. Return on equity = $20,000 ÷ $80,000 (down payment/equity) = 25%.
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