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soldier1979 [14.2K]
3 years ago
7

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 nu

mbers above (to the nearest thousand)?
Business
1 answer:
S_A_V [24]3 years ago
7 0

Answer:

$4,583,000

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

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