Real Estate Math
If you invest $50,000 in a property and it generates $5,500 annual cash flow, what is your cash-on-cash return?
A9%
B10%
C11%✓ Correct
D12%
Explanation
Cash-on-cash return = Annual cash flow ÷ Cash invested = $5,500 ÷ $50,000 = 0.11 = 11%. Using the values given ($50,000, $5,500), apply the appropriate formula.. The correct answer is 11%.. This is a common calculation on the Arkansas real estate exam.
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