A Property Is Financed with a 75% Loan at 11

question 30

Multiple Choice

A property is financed with a 75% loan at 11.5% over 25 years.The property produces an ATIRR on total investment of 7.34% based on a tax rate of 31%.What can be said about the leverage associated with the property?

• A)Negative leverage exists
• B)Positive leverage exits
• C)No leverage exists
• D)Can't tell without knowing the ATIRR on equity

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