Real Estate Math
A Tennessee property has a cap rate of 8% and an NOI of $44,000. The investor financed $350,000. What is the cash-on-cash return if the annual debt service is $28,000 and the down payment was $100,000?
A16%✓ Correct
B8%
C44%
D12.8%
Explanation
Cash flow after debt service = $44,000 − $28,000 = $16,000. Cash-on-cash return = $16,000 ÷ $100,000 = 16%.
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