Cash-on-cash return is the rate of return an investment earns, after expenses, based on the cash invested. For example, if an investor purchases a duplex at $100,000 with a 20 percent down payment, the cash invested is $20,000. Assume further that after all cash expenses are paid, including mortgage, taxes, insurance, utilities and repairs, the investor is left with $2,000 in cash. The cash on cash return would be 10 percent ($2,000 net income/$20,000 initial investment = .1, or 10 percent). Cash on cash return usually does not include depreciation because it is not an out-of-pocket expense. Similarly, cash-on-cash does not account for an asset appreciating, which distorts the actual rate of return in the long run. The cash-on-cash return also does not account for income taxes as this is a variable that is dependent upon the individual investor. Cash-on-cash essentially analyzes cash flows for an individual investment.