16. A property with an 10% unlevered IRR has a 70% LTV mortgage with an interest rate of 7% has Levered/Equity IRR of 17.0%. A new lender will charge 8.0% for an 80% LTV loan. What is the incremental cost of borrowing on the new higher LTV loan?

A. 15.0%

B. 6.6%

C. none of the choices are correct

D. 8.0%

17. A property with an 10% unlevered IRR has a 70% LTV mortgage with an interest rate of 7% has Levered/Equity IRR of 17.0%. A new lender will charge 8.0% for an 80% LTV loan. In determining whether it favorable to increase the loan size, what metrics are most appropriate for the borrower compare?

A. New Unlevered IRR to the New Levered/Equity IRR

B. Incremental cost of borrowing to the Base Case Levered/Equity IRR

C. Base Case Levered IRR to the New Levered IRR

D. Incremental cost of borrowing to the Base Case Unlevered IRR