If I buy a distressed loan at 50% discount to original face value $1,000,000 and then work with the obligor to refinance it at 80% of original face value two years from now when the economy is better and the original loan paid 10% p.a. of face value but I was a nice guy and dropped that to 6% p.a. of face value, what is my percentage return on my original $500,000 investment? (The refinancing gets me $800,000 from the bank and I now tear up the original loan so I am out at $800,000 with the original borrower now owing $800,000 to a new bank). Click on the calculator link to solve answer. (5 points). For partial credit show me your inputs.

Answer rating: 100% (QA)

I500000 FV1000000 N2 Y6 The percentage return on the original investment is FV I 1 1 Y ... View the full answer