The Graduates moved forward with their purchase and loan from a major lender. They have stabilized the cash flow and have maintained the net operating income from above. They have reached out to a mezzanine lender to inquire about secondary borrowing on the property. This lender would be willing to lend $800,000.00 and charge 12% interest compounded annually with a term of 10 years.

a. What is the return on the investors current equity in the subject property with only the initial borrowing of 60% loan to value? (2 points) b. After this additional borrowing what is the total interest annually? (1 point) c. What is the weighted average cost of debt? (2 points) d. What is the return on investor equity in the subject property if they proceed with the mezzanine lending? (2 points)