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Rates of Return of Cash Flow

Assume that an apartment complex is predicted to produce a consistent net $800,000 cash flow yearly in rent, after deducting all recurring variable costs (for example, taxes, utilities, and maintenance). When its current price is $10 million, in that case the rate of return this property is expected to produce is: (1) 8 percent. (2) 10 percent. (3) 12.5 percent. (4) 15 percent. (5) 80 percent.

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