Real Estate Math
An Arizona investor purchases a property for $400,000 with $100,000 down payment. The annual cash flow is $8,000. What is the cash-on-cash return?
A2%
B8%✓ Correct
C4%
D10%
Explanation
Cash-on-cash return = Annual cash flow ÷ Cash invested = $8,000 ÷ $100,000 = 0.08 = 8%.
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