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Updated almost 4 years ago,

User Stats

578
Posts
268
Votes
William Coet
  • Lititz, PA
268
Votes |
578
Posts

Is My Simple ROI Math Correct? Cash Vs. Financing

William Coet
  • Lititz, PA
Posted

Hello,

I would appreciate any insight on this subject. My math shows the ROI being the same for a cash purchase vs.a financed purchase. Is this correct?

My examples here show the return is the same for both scenarios (and may be incorrect)

Example 1. 100k cash purchase. 10k annual profit. Sell after 10 yrs for 100k. Total invested =100k, total earned = 200k (100% return divided by 10 years = 10% annual ROI)

Example 2. 100k financed purchase (20k down). Neutral cash flow for 10 years. Sell after 10 yrs for 100k. Total invested 20k, Total earned = 100k (100% return divided by 10 years = 10% annual ROI)

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