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"A property has an annual before-tax cash flow of $100,000 and income taxes of $12,000. ?The investor has $2 million invested in this property. What is the investor's cash-on-cash return"

Respuesta :

Answer:

The investor's cash-on-cash return is 5%

Explanation:

The formula to compute the cash on cash return is shown below:

= (Annual before-tax cash flow) ÷ (total invested amount)

= ($100,000) ÷ (2,000,000)

= 0.05

= 5%

There is no use of the income tax so we do not consider it in the computation part. Hence, ignored this income tax expense

It is always expressed in the percentage form.

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