Real Estate Math
A property has an NOI of $78,000, annual debt service of $54,000, and was purchased for $975,000. What is the cash-on-cash return if the down payment was 25%?
A8.0%
B9.6%✓ Correct
C10.4%
D11.2%
Explanation
Down payment = 25% × $975,000 = $243,750. Cash flow = NOI − Debt service = $78,000 − $54,000 = $24,000. Cash-on-cash = $24,000 ÷ $243,750 = 9.85% ≈ 9.6%.
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