Question
An investor is considering the purchase of a property for $1 million. Based on the $1 million price, the property has a cap rate of
An investor is considering the purchase of a property for $1 million. Based on the $1 million price, the property has a cap rate of 10.5%. The investor can obtain an interest-only mortgage loan at 8.0%. Suppose the investor borrows 75% of the price to acquire the property. What is the maximum price the investor could pay for the property before debt financing has a neutral effect on the equity cash yield?
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Fundamental Accounting Principles Volume II
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
16th Canadian edition
978-1260305838
