Suppose we have the following real estate speculation scenario for a 1 year investment: Purchase price...
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Suppose we have the following real estate speculation scenario for a 1 year investment: Purchase price of house: $150,000 Equity: $120,000 Debt: $30,000 @10% interest Interest Payments: $3,000 What is the leverage ratio in this scenario? Suppose that real estate prices are increasing. All else being equal, what would happen if the leverage ratio increased? Suppose we have the following real estate speculation scenario for a 1 year investment: Purchase price of house: $150,000 Equity: $120,000 Debt: $30,000 @10% interest Interest Payments: $3,000 What is the leverage ratio in this scenario? Suppose that real estate prices are increasing. All else being equal, what would happen if the leverage ratio increased?
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Answer rating: 100% (QA)
Leverage ratio Total debt total equity So leverage ratio 30000 120000 Therefore leverage ratio 0... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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