10. A property is financed with an 85% loan-to-value ratio at 10% interest over
ID: 2803434 • Letter: 1
Question
10. A property is financed with an 85% loan-to-value ratio at 10% interest over 25 years. What would the BTIRRE on equity be estimated at given that the BTIRRP is 10.75%? (C) (A)10.1% (B)10.4% (C)15.0% (D)13.2% 10. A property is financed with an 85% loan-to-value ratio at 10% interest over 25 years. What would the BTIRRE on equity be estimated at given that the BTIRRP is 10.75%? (C) (A)10.1% (B)10.4% (C)15.0% (D)13.2% 10. A property is financed with an 85% loan-to-value ratio at 10% interest over 25 years. What would the BTIRRE on equity be estimated at given that the BTIRRP is 10.75%? (C) (A)10.1% (B)10.4% (C)15.0% (D)13.2%Explanation / Answer
BTIRRE = BTIRRP + (BTIRRP- BTIRRD)*DEBT/EQUITY
= 10.75 + (10.75-10)*85/15
=10.75+4.25
=15
OPTION C
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