Real Estate Math
A property is purchased for $220,000 with a $22,000 down payment. If it appreciates to $275,000, what is the return on equity (based on original equity)?
A25%
B250%✓ Correct
C22.7%
D150%
Explanation
Gain = $275,000 - $220,000 = $55,000. Return on equity = $55,000 ÷ $22,000 = 2.50 = 250%. This demonstrates the power of leverage in real estate.
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