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Compute the capitalization rate for the following financing: First mortgage loan for 60% of value carrying a 4% rate, amortizing over 30 years Second mortgage

Compute the capitalization rate for the following financing:

First mortgage loan for 60% of value carrying a 4% rate, amortizing over 30 years

Second mortgage loan (mezzanine debt) for 20% of value, 8% interest only for 5 years

Equity for 20% of value with an assumed opportunity cost of 10%

Assume a combined 35% tax rate for the borrower.

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