Real Estate Math
A Minnesota investor wants to achieve a 10% cash-on-cash return on a $50,000 cash investment in a rental property. What minimum annual cash flow is required?
A$4,000
B$5,000✓ Correct
C$6,000
D$7,500
Explanation
Cash-on-cash return = Annual cash flow / Cash invested. Required annual cash flow = Cash invested x Desired return = $50,000 x 10% = $5,000.
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