Real Estate Math
An investor puts $50,000 down on an investment property. After one year, the property earns $7,500 in net income. What is the cash-on-cash return?
A10%
B12.5%
C15%✓ Correct
D17.5%
Explanation
Cash-on-cash return = Annual cash income ÷ Initial cash investment = $7,500 ÷ $50,000 = 0.15 = 15%. Using the values given ($50,000, $7,500), apply the appropriate formula.. The correct answer is 15%.. This is a common calculation on the Louisiana real estate exam.
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