Financial leverage can be helpful in that it stretches your equity, but it can be hurtful...

 

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Financial leverage can be helpful in that it stretches your equity, but it can be hurtful if you cannot make the payments to your lender. So, what can you learn from this investment in a real estate deal? What might you consider in recasting the capital stack? Four sentences or less. 1. 10% Equity 2. Loan Interest Rate: 7% 3. Loan Amortization: 20-years 4. Total Capitalization: $20 million 5. Cash Flow Available for Debt Service (including Amortization) and partner returns: $1.5 million Financial leverage can be helpful in that it stretches your equity, but it can be hurtful if you cannot make the payments to your lender. So, what can you learn from this investment in a real estate deal? What might you consider in recasting the capital stack? Four sentences or less. 1. 10% Equity 2. Loan Interest Rate: 7% 3. Loan Amortization: 20-years 4. Total Capitalization: $20 million 5. Cash Flow Available for Debt Service (including Amortization) and partner returns: $1.5 million

Answer rating: 100% (QA)

1 You should consider increasing your equity to 20 to reduce your loan payments and ... View the full answer