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A property is purchased for $1,000,000. Financing is obtained at a 70% loan-to-value ratio with annual debt service of $65,000. The property produces a net
A property is purchased for $1,000,000. Financing is obtained at a 70% loan-to-value ratio with annual debt service of $65,000. The property produces a net operating income of $95,000. If in the current market, the acceptable equity dividend rate is 7% or higher, would this project be acceptable?
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It is impossible to answer this question using the information provided.
Yes, because the equity dividend rate is 10%.
No, because the equity dividend rate is higher than 7%.
No, because the equity dividend rate is 5.5%.
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