Question: 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

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

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