$1.)$ If the cap rate on a property is $7\mathrm{.}5\%$ and loans are

available at a $6\%$ mortgage constant then what is the

expected income component on the before$-$tax return

$($i$.$e$.,$ cash$-$on$-$cash return$)$ if the investor borrows $50\%$ of

the property price? The mortgage constant is the

$$mortgage capitalization rate$$ and defined as the annual

amount of debt service to the total value of the loan. For

example, a $$1,000$ payment per month on $$200,000$ is a

mortgage constant of $$12,000/$ $$200,000=6\%.$

$1$b$.)$ What is the answer if the leverage ratio equals $3?$