Real Estate Math
A Virginia investor buys a property for $400,000 using $80,000 down. Annual NOI is $32,000. What is the cash-on-cash return?
A8%✓ Correct
B40%
C12.5%
D10%
Explanation
Cash-on-cash return = Annual Cash Flow ÷ Down Payment. Assuming NOI approximates cash flow = $32,000 ÷ $80,000 = 0.
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