Real Estate Math
A North Dakota investor's annual before-tax cash flow is $18,000 on a $300,000 property purchased with $60,000 down. What is the cash-on-cash return?
A6%
B30%✓ Correct
C50%
D18%
Explanation
Cash-on-cash return = Annual cash flow / Cash invested = $18,000 / $60,000 = 0.30 = 30%. Using the values given ($18,000, $300,000), apply the appropriate formula.. The correct answer is 30%.. This is a common calculation on the North Dakota real estate exam.
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