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)?

Question

asked Nov 15, 2021 71.8k views

1 Answer

Pax Vobiscum · Answer 1 · 2021-11-21T14:32:03+0000

Answer:

$4,583,000

Step-by-step explanation:

The computation of the value of the property is shown below:

We know that

Return on investment = Operating Income ÷ Average Operating Assets

12% = $550,000 ÷ Average Operating Assets

So, the average operating assets would be

= $550,000 ÷ 12%

= $4,583,000

We simply applied the return on investment formula so that the approximate amount can arrive