An investor would like to purchase a new apartment property for

$$2$mm$.$ However, she faces the decision of whether to use $70$ percent

versus $80$ percent financing. The $70$ percent loan can be obtained at

$10$ percent interest for $25$ years. The $80$ percent loan can be

obtained at $11$ percent interest for $25$ years. NOI is expected to be

$$190,000$ per year and increase at $3$ percent annually, the same rate

at which the property is expected to increase in value. The

building and improvements represent $80$ percent of value and will be

depreciated over $27\mathrm{.}5$ years $(1/27\mathrm{.}5).$ The project is expected to be

sold after five years. Assume a $36$ percent tax bracket for all

income and capital gains taxes.a$.$ What would be the BTIRR and ATIRR at each level of financings

$($assume monthly mortgage amortization$)?$b$.$ What is the break$-$even interest rate $($BEIR$)$ for this

project?c$.$ What is the marginal cost of the $80$ percent loan? What does

this mean?d$.$ Does each loan offer favorable financial leverage? Which

would you recommend and why?