Real Estate Math
A Virginia investor purchases a 4-unit apartment building for $600,000 with $120,000 down. Annual NOI is $42,000. What is the cash-on-cash return?
A7%
B30%
C35%✓ Correct
D42%
Explanation
Cash-on-cash return = Annual cash flow ÷ Cash invested. Assuming NOI approximates cash flow (ignoring debt service for this calculation): $42,000 ÷ $120,000 = 0.
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