Which investment provides a higher Return on Investment: a hotel with a ROI of 9% or a medical office building with a projected annual Cash Flow of $120,000 on a $875,000 investment?

To determine which investment offers a higher Return on Investment (ROI), it is crucial to calculate the ROI for the medical office building first. The formula for ROI is:

[ \text{ROI} = \frac{\text{Annual Cash Flow}}{\text{Investment Amount}} \times 100 ]

For the medical office building, substituting the provided values:

[ \text{ROI} = \frac{120,000}{875,000} \times 100 ]

Calculating this gives:

[ \text{ROI} = \frac{120,000}{875,000} = 0.1371 \text{ or } 13.71% ]

This indicates that the medical office building has a projected ROI of 13.71%.

On the other hand, the hotel investment provides a specified ROI of 9%. Comparing these two, the ROI of the medical office building at 13.71% is indeed greater than the hotel’s ROI of 9%.

Thus, the medical office building investment is the one that offers the higher Return on Investment. Understanding these calculations can help real estate investors make informed decisions about where to allocate their resources for the best potential returns.