1a. The acquisition of a $2.4M property is financed at a loan-to-value ratio of 60%. What is the amount borrowed?

1b. What is the corresponding debt-to-equity ratio for this transaction?

1c. The unlevered return on the asset is 10% and the cost of debt is 6%. What is the return on equity for this acquisition based on the Modigliani-Miller propositions?

1d. The purchaser can increase the amount they are borrowing to $1,600,000. If the cost of debt and return on asset remains the same, what is the return on equity for this acquisition given the new amount of debt based the Modigliani-Miller proposition?