Question: To determine if positive leverage exists, you should compare the following: A. The capitalization rate and the mortgage constant B. The cost of funds and

To determine if positive leverage exists, you should compare the following:

A. The capitalization rate and the mortgage constant

B. The cost of funds and the unleveraged yield

C. The unleveraged yield and the leveraged yield

D. Both b and c

The unleveraged, before-tax internal rate of return of a property is 12 percent. With a specific mortgage loan on this property, the before-tax equity yield is 12 percent. This reflects:

A. Negative leverage from the loan

B. Positive leverage from the loan

C. Neutral leverage from the loan

D. None of the above.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

True Or False Some perceive tort liability as a tax because it puts some people out of business, makes some products unaffordable, and hampers some governmental bodies in their delivery of services.

To determine if positive leverage exists, you should compare the following: A. The capitalization rate and the mortgage constant B. The cost of funds and the unleveraged yield C. The unleveraged...

Value of anything is * The value of al possible future cash flows/returns Risk adjusted total value of all future cash flows Required rate of return of a stock is known as * Dividend payout rate...

s: 1. Craine Crossroads has 100 two-bedroom apartments that currently rent for $900 per month. The complex currently has five vacant units, matching the vacancy rate for two-bedroom units in the...

People Angus Cartwright IV was an investment advisor based in Arlington, Virginia, the home of many members of the DeRight family. In September 2013 his attention focused on the needs of two cousins...

Complete Review Questions 1-10 at the end of "HospitalityIndustry Managerial Accounting," Ch. 5. 5Ratio AnalysisChapter 5 Outline Ratio Standards Purposes of Ratio Analysis What Ratios Express...

this is really a real estate REITS class thank you so so much! Part I: Circle the letter of your answer (40%,2% each). Thene is aniy one cormect anmwer. 1) The MSCI US RFIT Index (NRMZ) is one of the...

Need help with the attached questions from finance major Assignment 3 Questions 1. Anle Corporation has a current price of $27, is expected to pay a dividend of $2 in one year, and its expected price...

FIN201 Final Exam Sample MULTIPLE CHOICE. 1. Why will banks permit the use of an overdraft as suitable for funding the purchase of inventory that will quickly be converted into cash? A. To assist a...

Attached is the assignment requirement and 2 previous assignments as example 1- the assignment should be zero plagiarism and similarity (no copy ans paste is accepted) 2- should be completed in the...

Hello, This is the Fina 210 Course about Real estate. Could you help me to solve this problem and show me a solution? because i want to know how to solve this type of question in exam. Thank you! ps:...

What are the four types of audit opinions? What is the conclusion of each one?

Suppose a defendant goes to a bar, gets blind drunk, and then goes out and robs a store. Is his intoxication a defense to the robbery?

What is a potential issue with relying solely on NPV for decision - making? Group of answer choices It is only useful for small projects with short time horizons. It overestimates the value of...

On 1 March 2007 DB Limited issued R560 000 15% debentures at R98. The debentures were to be redeemed at par in four equal annual payments starting 28 February 2010. Required: Journalise the above...