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Consider the following information about a parcel of real estate that has a cost of $1.0 million:

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6) Consider the following information about a parcel of real estate that has a cost of $1.0 million;Annual Cash Flow Probability;$200,000 .4;$180,000 .6;a) What is the expected annual percentage return on this property?;Solution: 80,000 + 108,000 = $188,000;b) If an investor can borrow 70%of the value (cost) at 12% (interest only), what is the expected return on equity?;Solution: 34.67%;Additional Requirements;Level of Detail: Show all work

 

Paper#20985 | Written in 18-Jul-2015

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