Question: This question shows how leverage influences IRR and that high leverage may incentivize default. 1. You pay $1m for a property with 9% cap rate,

This question shows how leverage influences IRR and that high leverage may incentivize default.

1. You pay $1m for a property with 9% cap rate, keep it for 5 years, and sell at the end of year 5 at the same cap rate. The selling costs are 5% of the price. What is your IRR? Enter your answer in percent, but without percent sign (including year t).

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