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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)?
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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)?

User Hossein Noroozpour
by
5.1k points

1 Answer

6 votes

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

User Pax Vobiscum
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5.5k points
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