Cash On Cash Return

From Investment Wiki

A rate of return defined as cash flow after taxes divided by total dollar investment. Formula - (CASH FLOW (a/t) / Invested Capital) * 100

In the current analysis, at the end of the first year you have a total cash investment of $60,000 and Cash Flow after taxes is $5,634. Dividing the Cash Flow by your total cash investment gives a Cash-On-Cash rate of return of 9.39%.

Remember, expenditures such as closing costs and loan origination costs are included in the total amount invested.