Use the same information as in problem 3. Now assume a loan for $1.5 million is obtained

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Use the same information as in problem 3. Now assume a loan for $1.5 million is obtained at a 10 percent interest rate and a 15-year term.

a. Calculate the expected IRR on equity and the standard deviation of the return on equity.

b. Contrast the results from (a) with those from problem 3. Has the loan increased the risk? Explain.

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Real Estate Finance and Investments

ISBN: 978-0073377339

14th edition

Authors: William Brueggeman, Jeffrey Fisher

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Question Posted: Sep 26, 2018 01:10 PM

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Use the same information as in problem 3. Now assume a loan for $1.5 million is obtained

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ASSUMPTIONS Pessimistic MostLikely Optimistic Scenario Probability 30 40 30 NOI 200000 200000 ...View the full answer

Real Estate Finance and Investments

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