Consider the table for an income property that is under evaluation for purchase with a $455,000 loan. What would be the equity dividend rate?

	Year 1	Year 2	Year 3
NOI	$ 72,000	$ 74,880	$ 77,875
DS	60,000	60,000	60,000
Cash flow	$ 12,000	$ 14,880	$ 17,875
Resale in Year 3			900,000
Less mortgage balance			435,000
Total cash flow	$ 12,000	$ 14,880	$ 482,875
Present value of cash flow @ 15%	$ 10,435	$ 11,251	$ 317,498

Multiple Choice

• 2.4 %

• 3.5 %

• 4.2%

• 5.3%