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Ann purchased a property for $1,000,000. She bought the property at a 6.00% cap rate. She finances the purchase with an Interest Only senior loan

Ann purchased a property for $1,000,000. She bought the property at a 6.00% cap rate.

She finances the purchase with an Interest Only senior loan at 50% LTV at an interest rate of 4.00%.

She also decides to get subordinate / mezzanine financing for 20% of the capital stack (from 50%-70% LTV) at 8.00% interest only.

What is the weighted average cost of Anns debt?

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