The equity dividend rate is measured against which of the following?

The equity dividend rate, also known as the cash-on-cash return, is defined as the ratio of the annual cash flow generated by an investment property to the initial equity investment made in that property. This measure is essential for investors because it provides insight into the returns generated by their actual cash investment, allowing them to assess the performance of their investment relative to the cash they have put at risk.

When calculating the equity dividend rate, the annual cash flow is determined by subtracting operating expenses and debt service from the gross rental income. The resulting figure, which reflects the cash generated by the property, is then divided by the initial equity investment—the amount of money the investor has directly contributed to acquire the property. This calculation helps investors evaluate how effectively their equity is being utilized in generating returns.

While total property value, current market rental income, and other metrics are important in the broader context of real estate investment analysis, they do not specifically pertain to the equity dividend rate calculation. Thus, the reference point for the equity dividend rate is indeed the initial equity investment.