QUESTION 1 Leverage and limited liability 1. You pay $1m for a property with 9% cap rate, keep it for 5 years, and sell at the end of year 5 at the same cap rate. The selling costs are 5% of the price. What is your IRR? O 6.15% O 8.15% O 7.15% O 9.15% QUESTION 2 Leverage and limited liability 2. You are doing the same as above but instead of paying cash, you take a 70% LTV IO loan at 5% annual rate. What is your IRR? O 11.36% O 16.47% O 12.35% O 15.91%