A Real Estate Asset Provides an 11% Return (The After

question 22

Multiple Choice

A real estate asset provides an 11% return (the after tax cash flow is 11% of the cost of the asset) .Debt can be obtained at a rate of 12% .Thus:

• A) there is negative financial leverage
• B) there is positive financial leverage
• C) there is no financial leverage
• D) financial leverage cannot be determined

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