Real Estate Math
A North Dakota investor purchases a property for $350,000 with $70,000 down. The property generates $24,000 NOI per year. What is the cash-on-cash return on the down payment?
A5.14%
B6.86%✓ Correct
C8%
D34.3%
Explanation
Cash-on-cash return = Annual cash flow / Equity invested. Assuming NOI ≈ cash flow before debt service for simplicity: $24,000 / $70,000 = 0.
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