Real Estate Math
A Kentucky property investor receives a cash flow of $18,000 per year after debt service on a $250,000 investment. What is the cash-on-cash return?
A6.4%
B7.2%✓ Correct
C8%
D9%
Explanation
Cash-on-cash return = Annual Cash Flow ÷ Cash Invested = $18,000 ÷ $250,000 = 7.2%. Using the values given ($18,000, $250,000), apply the appropriate formula.. The correct answer is 7.2%.. This is a common calculation on the Kentucky real estate exam.
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