Cash on Cash Yield

This question tests whether you can translate basic property underwriting into levered investor returns, which is a core skill in real estate private equity interviews. You need to understand how cap rate drives net operating income, how leverage splits the purchase into debt and equity, and how financing costs affect the cash flow available to equity holders. Interviewers ask questions like this to see if candidates can move cleanly between property level economics and sponsor level returns, and to check comfort with the simple but important relationship between operating income, debt service, and equity yield.