Real Estate Math
A Virginia property owner has $220,000 in equity and the property generates $18,000 annual net cash flow after debt service. What is the cash-on-cash return?
A7.5%
B8.0%
C8.18%✓ Correct
D9.0%
Explanation
Cash-on-cash return = Net Cash Flow ÷ Equity Invested = $18,000 ÷ $220,000 = 8.18%. Using the values given ($220,000, $18,000), apply the appropriate formula.. The correct answer is 8.18%.. This is a common calculation on the Virginia real estate exam.
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