National Real Estate Exam Quiz: Calculate Investment Returns
20 questions · exam conditions
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Calculate Investment ReturnsQuestion 1 of 20

A duplex was purchased for $220,000 with $44,000 cash down. Annual net income is $19,800. What is the return on equity?

45.0%
35.2%
52.8%
41.6%
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National Real Estate Exam Quiz

National Real Estate Exam Quiz: Calculate Investment Returns

Practice Calculate Investment Returns in National Real Estate Exam with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Calculate Investment Returns, giving you a quick way to practice the rules, question types, and explanations that matter most for National Real Estate Exam.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

A duplex was purchased for $220,000 with $44,000 cash down. Annual net income is $19,800. What is the return on equity?

  1. 45.0% (correct answer)
  2. 35.2%
  3. 52.8%
  4. 41.6%
Explanation: Return on equity = Annual Net Income ÷ Cash Investment = $19,800 ÷ $44,000 = 0.45 = 45.0%. Choice B uses total property value incorrectly. Choice C includes loan principal payments. Choice D applies incorrect tax shield calculations.

Question 2

A property was purchased for $275,000 and is now worth $247,500. The annual rental income is $22,000. What is the current yield based on original investment?

  1. 8.0% current yield on original investment (correct answer)
  2. 8.9% current yield on original investment
  3. 6.5% current yield on original investment
  4. 7.3% current yield on original investment
Explanation: Current yield based on original investment = Annual Income ÷ Original Purchase Price = $22,000 ÷ $275,000 = 0.08 = 8.0%. Current market value is not used in this calculation.

Question 3

A property portfolio worth $1,500,000 generates $120,000 in annual net income and appreciates 2.5% per year. What is the total annual return rate?

  1. 10.5% total annual return rate (correct answer)
  2. 8.0% total annual return rate
  3. 12.3% total annual return rate
  4. 9.2% total annual return rate
Explanation: Income return = $120,000 ÷ $1,500,000 = 8.0%. Total return = Income return + Appreciation = 8.0% + 2.5% = 10.5%. Choice B shows only income return. Choice C compounds returns incorrectly. Choice D uses wrong portfolio valuation.

Question 4

An office building purchased for $1,200,000 sold for $1,080,000 after generating $360,000 in total net income over four years. What was the total investment return?

  1. 20.0% (correct answer)
  2. 15.8%
  3. 12.3%
  4. 18.5%
Explanation: Total return = (Total Income + Capital Gain/Loss) ÷ Initial Investment = (360,000+(−360,000 + (-120,000)) ÷ $1,200,000 = $240,000 ÷ $1,200,000 = 20.0%. Choice B excludes capital loss. Choice C uses wrong income calculation. Choice D includes transaction costs incorrectly.

Question 5

An investment property generates $28,000 annual NOI on a $350,000 purchase price. After three years, comparable properties indicate a 15% total appreciation. What is the average annual total return?

  1. 13.0% average annual total return (correct answer)
  2. 15.5% average annual total return calculation
  3. 11.2% average annual total return calculation
  4. 17.8% average annual total return calculation
Explanation: Annual income return = $28,000 ÷ $350,000 = 8.0%. Annual appreciation = 15% ÷ 3 years = 5.0%. Total annual return = 8.0% + 5.0% = 13.0%. Choice B incorrectly adds appreciation to income return. Choice C excludes appreciation component. Choice D uses total appreciation without annualizing.

Question 6

A commercial building was purchased for $650,000 with 25% down. After two years, it's worth $702,000 and generated $78,000 in net income. What is the return on equity?

  1. 80.0% total return on equity investment (correct answer)
  2. 65.2% total return on equity investment
  3. 72.8% total return on equity investment
  4. 58.4% total return on equity investment
Explanation: Down payment = $650,000 × 25% = $162,500. Total return = Income + Appreciation = $78,000 + $52,000 = $130,000. Return on equity = $130,000 ÷ $162,500 = 80.0%. Choice B uses total property value. Choice C excludes appreciation component. Choice D applies loan principal reduction incorrectly.

Question 7

A retail property was bought for $420,000 and sold for $462,000 after 18 months. What is the annualized capital appreciation rate?

  1. 6.67% annualized capital appreciation rate (correct answer)
  2. 10.0% annualized capital appreciation rate
  3. 8.33% annualized capital appreciation rate
  4. 5.55% annualized capital appreciation rate
Explanation: Total appreciation = ($462,000 - $420,000) ÷ $420,000 = 10%. Time = 18 months = 1.5 years. Annualized rate = 10% ÷ 1.5 = 6.67%. Choice B shows total appreciation. Choice C uses wrong time period. Choice D applies incorrect mathematical conversion.

Question 8

A rental property generates $48,000 annual net income. The investor's initial cash investment was $120,000, with a $280,000 loan. What is the cash-on-cash return?

  1. 28.6%
  2. 40.0% (correct answer)
  3. 35.2%
  4. 32.8%
Explanation: Cash-on-cash return = Annual Net Income ÷ Initial Cash Investment = $48,000 ÷ $120,000 = 0.40 = 40.0%. Choice A incorrectly includes loan amount in denominator. Choice C uses gross income instead of net. Choice D applies an incorrect tax adjustment factor.

Question 9

An investor purchased a property for $380,000, spent $45,000 on renovations, and received $32,000 annual net income for three years before selling for $495,000. What was the total return on investment?

  1. 38.8% total return on investment (correct answer)
  2. 42.1% total return on investment
  3. 35.3% total return on investment
  4. 40.7% total return on investment
Explanation: Total investment = $380,000 + $45,000 = $425,000. Total income = $32,000 × 3 = $96,000. Capital gain = $495,000 - $425,000 = 70,000.Totalreturn=(70,000. Total return = (96,000 + $70,000) ÷ $425,000 = 38.8%. Choice B excludes renovation costs. Choice C uses wrong income calculation. Choice D includes transaction costs incorrectly.

Question 10

A retail property generates $75,000 annual NOI. If an investor requires a 9% return and the property appreciates 3% annually, what is the total expected annual return percentage?

  1. 12.0% (correct answer)
  2. 15.3%
  3. 9.8%
  4. 10.7%
Explanation: Total expected return = Income Return + Appreciation = 9% + 3% = 12.0%. Choice B compounds the returns incorrectly. Choice C uses only income return component. Choice D applies incorrect risk adjustment factors.

Question 11

A strip mall generates $95,000 annual NOI on an original investment of $1,180,000. Current market value is $1,298,000. What is the current yield on original investment?

  1. 8.05% current yield on original investment (correct answer)
  2. 7.32% current yield on original investment
  3. 9.18% current yield on original investment
  4. 6.85% current yield on original investment
Explanation: Current yield on original investment = Annual NOI ÷ Original Investment = $95,000 ÷ $1,180,000 = 0.0805 = 8.05%. Choice B incorrectly uses current market value. Choice C incorrectly includes appreciation component. Choice D applies depreciation adjustment incorrectly.

Question 12

A mixed-use property was purchased for $680,000 and generated $204,000 in net income over three years before selling for $714,000. What was the total return on investment?

  1. 35.0% total return on investment (correct answer)
  2. 40.2% total return on investment
  3. 30.8% total return on investment
  4. 32.6% total return on investment
Explanation: Total income = $204,000. Capital gain = $714,000 - $680,000 = 34,000.Totalreturn=(34,000. Total return = (204,000 + $34,000) ÷ $680,000 = $238,000 ÷ $680,000 = 35.0%. Choice B uses wrong capital gain calculation. Choice C excludes appreciation component. Choice D includes transaction costs incorrectly.

Question 13

A property was purchased for $250,000 three years ago and is now worth $285,000. What is the total appreciation percentage?

  1. 14.0% (correct answer)
  2. 12.3%
  3. 16.8%
  4. 11.7%
Explanation: Total appreciation = (Current Value - Original Cost) ÷ Original Cost = ($285,000 - $250,000) ÷ $250,000 = $35,000 ÷ $250,000 = 0.14 = 14.0%. Choice B uses the wrong denominator. Choice C includes rental income incorrectly. Choice D miscalculates the appreciation amount.

Question 14

A rental property's value increased from $185,000 to $203,500 over 30 months. What is the annualized appreciation rate?

  1. 4.0% annualized appreciation rate per year (correct answer)
  2. 10.0% annualized appreciation rate per year
  3. 6.8% annualized appreciation rate per year
  4. 3.2% annualized appreciation rate per year
Explanation: Total appreciation = ($203,500 - $185,000) ÷ $185,000 = 10%. Time period = 30 months ÷ 12 = 2.5 years. Annualized rate = 10% ÷ 2.5 = 4.0%. Choice B shows total appreciation. Choice C uses incorrect time conversion. Choice D applies wrong mathematical formula.

Question 15

An apartment building's value declined from $925,000 to $833,250 over 30 months. What was the annualized depreciation rate?

  1. 4.0% annualized depreciation rate (correct answer)
  2. 9.9% annualized depreciation rate
  3. 6.2% annualized depreciation rate
  4. 3.3% annualized depreciation rate
Explanation: Total depreciation = ($925,000 - $833,250) ÷ $925,000 = 9.9%. Time = 30 months ÷ 12 = 2.5 years. Annualized rate = 9.9% ÷ 2.5 = 4.0%. Choice B shows total depreciation without annualizing. Choice C uses incorrect time conversion. Choice D applies wrong mathematical formula.

Question 16

An investment property purchased for $180,000 now has a market value of $195,000 after 18 months. What is the annualized appreciation rate?

  1. 5.56% (correct answer)
  2. 8.33%
  3. 6.25%
  4. 4.17%
Explanation: First calculate total appreciation: ($195,000 - $180,000) ÷ $180,000 = 8.33%. Then annualize: 8.33% ÷ 1.5 years = 5.56% per year. Choice B shows total appreciation, not annualized. Choice C uses incorrect time period. Choice D applies wrong mathematical conversion.

Question 17

A warehouse purchased for $580,000 with $145,000 cash down produces $52,000 annual net income and appreciates $23,000 per year. What is the annual return on equity?

  1. 51.7% annual return on equity (correct answer)
  2. 43.2% annual return on equity
  3. 38.5% annual return on equity
  4. 47.9% annual return on equity
Explanation: Annual return on equity = (Annual Income + Annual Appreciation) ÷ Cash Investment = ($52,000 + $23,000) ÷ $145,000 = $75,000 ÷ $145,000 = 51.7%. Choice B excludes appreciation component. Choice C uses total property value instead of equity. Choice D incorrectly includes debt service.

Question 18

A property's value decreased from $320,000 to $288,000 over two years. What is the annualized depreciation rate?

  1. 5.0% (correct answer)
  2. 10.0%
  3. 3.2%
  4. 6.8%
Explanation: Total depreciation = ($320,000 - $288,000) ÷ $320,000 = 10%. Annualized rate = 10% ÷ 2 years = 5.0% per year. Choice B shows total depreciation, not annualized. Choice C uses wrong base amount. Choice D includes market adjustment factors incorrectly.

Question 19

A duplex investment required $60,000 cash down on a $240,000 purchase. Annual cash flow after debt service is $8,400. What is the cash-on-cash return?

  1. 14.0% cash-on-cash return on equity (correct answer)
  2. 18.2% cash-on-cash return on equity
  3. 12.5% cash-on-cash return on equity
  4. 16.8% cash-on-cash return on equity
Explanation: Cash-on-cash return = Annual Cash Flow ÷ Initial Cash Investment = $8,400 ÷ $60,000 = 0.14 = 14.0%. Choice B uses pre-debt service income. Choice C uses total purchase price incorrectly. Choice D includes principal pay-down benefits incorrectly.

Question 20

An investor bought a property for $150,000, invested $25,000 in improvements, and sold it for $210,000. What is the return on total investment?

  1. 20.0% return on total invested capital (correct answer)
  2. 23.3% return on total invested capital
  3. 16.7% return on total invested capital
  4. 40.0% return on total invested capital
Explanation: Total investment = $150,000 + $25,000 = 175,000.Return=(175,000. Return = (210,000 - $175,000) ÷ $175,000 = $35,000 ÷ $175,000 = 0.20 = 20.0%.