Calculate the ?rst-year equity dividend rate

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Consider the following: an investor buying a refurbished motel for $4 million expects to experience a net operating income of $300,000 in the ?rst year. The property will have a 70% mortgage with a 3-year term, upon which interest only payments at j1 = 8% are to be made annually. Calculate the ?rst-year equity dividend rate ("cash throw-off" return).

Reference no: EM132974110

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