A Property Is Financed with an 85% Loan-To-Value Ratio at 10

question 14

Multiple Choice

A property is financed with an 85% loan-to-value ratio at 10% interest over 25 years.Estimate the BTIRRE on equity given that the BTIRRP is 10.75%.

• A) 10.1%
• B) 10.4%
• C) 15.0%
• D) 13.2%

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Definitions:

Financing Activities

Transactions and events whereby resources are obtained from, or repaid to, owners (equity financing) and creditors (debt financing).

Long-Term Debt

Borrowings and financial obligations payable over a period longer than one year.

Equity

Represents the value of an owner's interest in a property or business, calculated as the difference between assets and liabilities.

Capital Acquisitions Ratio

A measure of a company's financial ability to sustain its investment activities.