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 that result in changes to the size and composition of the equity capital or borrowings of the entity, detailed in the cash flow statement.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's operating cycle, whichever is longer.

Financing Cash Flow

Cash flow that is related to the financing of a company's operations, including debt, equity, and dividends.

Common Stock

A form of financial security that denotes part ownership in a company and entails a stake in the company's earnings or deficits.