Your own a warehouse financed at a current weighted average cost of capital equal to 8%. You have a second mortgage at a fixed rate of 10% representing 20% of the capital stack. You were successful in negotiating a new ten-year lease with your single tenant, so you approach your second mortgage lender with a proposal to reduce the interest rate on the second mortgage to a fixed rate of 8%. Your second mortgage lender agrees. Calculate the change to your weighted average cost of capital.

Question 16 options:

	There is not enough information provided to make the calculation.
	It went down by 200 basis points
	It went up by 200 basis points
	It went down by 40 basis points

You project a leveraged IRR of 25%, assuming a debt to value ratio of 60%. The interest rate on your debt is 8%. Increasing the debt to value ratio to 70% would

Question 17 options:

	decrease the leveraged IRR.
	not be feasible.
	not impact the leveraged IRR.
	Increase the leveraged IRR.