Real Estate Math
A Hawaii investor bought a property for $1,000,000 with a $750,000 loan at 5% interest. If the NOI is $60,000 and interest-only debt service is $37,500, what is the before-tax cash flow?
AA. $22,500✓ Correct
BB. $60,000
CC. $37,500
DD. $25,000
Explanation
Cash flow = NOI - Debt Service = $60,000 - $37,500 = $22,500. To solve this, multiply the relevant values: $1,000,000 and $750,000 at 5%..
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