Real Estate Math
An Indiana investor puts $80,000 down on a $320,000 property and earns $28,000 in net income the first year. What is their cash-on-cash return?
A8.75%
B35%✓ Correct
C28%
D22%
Explanation
Cash-on-cash return = Annual cash flow ÷ Cash invested = $28,000 ÷ $80,000 = 35%. Using the values given ($80,000, $320,000), apply the appropriate formula..
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