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You are buying a property and are considering taking out a 5% loan amortizing at a 30 -year rate with monthly payments. Your first evaluation

image text in transcribed You are buying a property and are considering taking out a 5% loan amortizing at a 30 -year rate with monthly payments. Your first evaluation of the property indicates that it will have CASH FLOW for REPAYING YOUR LOAI of $1,000,000 per year. (a) What is the maximum conceivable amount that might be loaned (before risk margins, etc. ar added) on the property, given this basic information on the available cash flow to repay the loan (b) If the Federal Reserve raises the rate on the 10 -year Treasury Bond by 2% and your loan intere rate goes up to 7%, how much can you now borrow, assuming the property cash flow stays th same

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