What calculation is used to assess cash-on-cash return?

The calculation used to assess cash-on-cash return is the annual cash income divided by the total cash invested. This metric helps investors evaluate the cash income generated from an investment property relative to the amount of cash they have invested in that property.

By focusing on annual cash income, which represents the actual cash flow received from the investment after operating expenses but before taxes, this calculation gives a clear picture of how efficiently the cash is being utilized. This is especially useful for investors looking for an immediate understanding of their return relative to the cash they have put into the investment.

Using this calculation allows investors to gauge the profitability of real estate investments in a straightforward manner, making it a preferred method for assessing performance, particularly in real estate owning and rental scenarios.

In contrast, the other options do not directly relate to the specific measure of cash-on-cash return as defined in investment analysis.