What is the return of cash?

Cash-on-Cash yield can refer to two main measures. The first is specifically related to the distribution of income credibility. The second is a very simple way to assess the return on investment generating income, such as assets. It simply consists of income before tax from the investment for a specified period, divided by the original invested amount. There are a number of restrictions, which is at best. Truust's income is an investment vehicle where those who decide on investments are thus made with the goal to produce consistent cash flows for investors known as distribution. The exact rules governing income confidence differ from Earth to Earth and are most often used in Canada and Australia. In this context, the return of cash is in fact a return on the investor from investing in the Trees. This is a technically hypothetical value because it compares revenues made in the past with the purchase price to be paid now.

More common use of cash yield JE for measures also known as cash return. This is a simple measure of income before investment tax compared to the investment amount. For example, if an investor buys USD assets (USD) $ 200,000 and rents it to $ 12,000 per year, cash yield is six percent.

This form of cash yield for valuation has certain significant restrictions. It does not take into account the tax that the investor must pay from the income: this may vary from case to the case, and thus influence how attractive the investment is. This does not take into account whether the interest is simple or composed; The six percent return in the above -mentioned example of the lease may not be as attractive in the long run as the money is paid, which pays four percent of interest that combines over time. And measuring only immediate return, the number does not take into account whether the value of the assets of the investment asset changes, for example, if the market price NEMOVitility increases or decreases the rental, which affects the ability to sell later for profit.

In the definition of specific confidence in income and a more general definition of cash yield, they should also be aware that the number does not distinguish between the return on capital and the return of capital. The return on capital is actually a profit from the investment. The return on capital means that some of the money raised by investors represent the loss of the total value of the investment vehicle or asset.