You have found a great property to invest in.  The purchase price is $1,000,000.  Both you and your investor partner recently won the lottery, so you don't need any loan.  Here is how you agreed to structure your investment:

You                       Investor

               Share of initial capital                                                  12%                      88%

               Each will earn a preferred return of                         7.0%                     7.0%

               After the pref is paid, you will split the cash          55%                      45%

 

If year 1 cash flow is $100,000, answer the following:

 

What are each of the partners investment?

What is each partner's year 1 preferred return?

What is each partner's year 1 profit split?

What is each partner's year 1 cash on cash return?

Answer rating: 100% (QA)

To calculate each partners investment year 1 preferred return year 1 profit split and year 1 cash on cash return lets go through the calculations step ... View the full answer