Question

An investment property generates a cash flow of $550,000 and has a ROI of 12%. What is the value of the property assuming the numbers above (to the nearest thousand)?

a) $4,583,000
b) $66,000
c) $6,111,000
d) $2,619,000

Answer 1

option A

Explanation:

given,

Cash flow = $550,000

Return on investment = 12 %

value of the property = ?

we know,

`ROI = (Profit)/(Investment)`

`value = (cash\ flow)/(ROI)`

`value = (\$ 550,000)/(0.12)`

value = $4,583,333.33

value is approximately equal to $4,583,000

Hence, the correct answer is option A