Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

If the cap rate on a property is 7% and loans are available at a 6% mortgage constant then what is the expected income component

If the cap rate on a property is 7% and loans are available at a 6% mortgage constant then what is the expected income component on the before-tax return (i.e., cash-on-cash return) if the investor borrows 60% of the property price? The mortgage constant is the mortgage capitalization rate and defined as the annual amount of debt service to the total value of the loan. For example, a $1,000 payment per month on $200,000 is a mortgage constant of $12,000 / $200,000 = 6%. what is the answer if the leverage ratio equals 3

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Python For Finance

Authors: Yves Hilpisch

2nd Edition

1492024333, 978-1492024330

More Books

Students also viewed these Finance questions

Question

1. Make sure you can defend the grade in the first place.

Answered: 1 week ago

Question

4 How can you create a better online image for yourself?

Answered: 1 week ago