What is the cash on cash rate of return for equity investors

Assignment Help Financial Management
Reference no: EM131535182

If the interest rate on a 25-year, $500,000 loan amortized over 300 months is 6% per year, and the overall capitalization rate for a property financed with that loan is 7%, what is the cash-on- cash rate of return (equity dividend rate) for the equity investors in this property? Is this evidence of positive leverage, or is this evidence of negative leverage?

Reference no: EM131535182

Questions Cloud

Calculate the standard deviation of its return : calculate the standard deviation of its return.
Equity capital using arithmetic and geometric growth rates : what is your best estimate of the company’s cost of equity capital using arithmetic and geometric growth rates?
Characteristics of overall equity other financial markets : what type of industry the company operates in, and a variety of other characteristics of the overall equity other financial markets.
The pretax or the aftertax cost of debt : Which is more relevant, the pretax or the aftertax cost of debt?
What is the cash on cash rate of return for equity investors : what is the cash-on- cash rate of return (equity dividend rate) for the equity investors in this property?
The demand for cash flowing from real estate capital market : The supply of cash flowing into real estate capital markets increases at a rate faster than the demand for cash flowing from real estate capital markets?
What is the apr and ear of your investment : The current share price is $77.59. What is the APR and EAR of your investment?
What is necessary capitalization rate for transaction price : What is the necessary capitalization rate for a transaction price equal to $2,200,000?
The time for long-term corporate bonds : What range of returns would you expect to see 68 percent of the time for long-term corporate bonds?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the project NPV and what is its IRR

Salevsky Manufacturing Company is considering the purchase of a new machine for $250,000 that will reduce manufacturing costs by $90,000 annually. Salevsky will use the 3-year MACRS accelerated method to depreciate the machine, and it expects to sell..

  What are the nominal and effective costs of trade credit

Grunewald Industries sells on terms of 1/10, net 30. Gross sales last year were $4,171,500, and accounts receivable averaged $438,000. Half of Grunewald's customers paid on the 10th day and took discounts. What are the nominal and effective costs of ..

  Use of equity and debt can be used for funding

The use of equity (both common an preferred stock) and debt can be used for funding. In addition, here is another good follow up question Referring to the components and the calculation of the cost of capital and the weighted average cost of capital,..

  Net futa tax and suta tax

Assume that in 2016, an employer had charged the wages account for $79,850. Of this amount, $720 will not be paid until the first payday in 2017. Further, the wages actually paid to employees in 2016 in excess of $7,000 each amounted to $29,840. Net ..

  About the combined option positions

Draw a profit diagram for each of the following combined option positions.

  Growth is expected to continue for an infinite period

The common stock of Old Betsy Flags is constantly selling for $28 per share. The company has been growing at a constant annual rate of 4%, and this growth is expected to continue for an infinite period. The required rate on the stock is 11%. If you b..

  Estimate of the companys cost of equity

Suppose Pat, Ltd. just issued a dividend of $2.50 per share on its common stock. The company’s dividends have been growing at a rate of 5%. If the stock currently sells for $65, what is your best estimate of the company’s cost of equity?

  Required annuity payments

A father is now planning a savings program to put his daughter through college. She is 13, she plans to enroll at the university in 5 years,

  What amount must you deposit each year

If the account pays 6.80 percent interest, what amount must you deposit each year?

  Assuming no market imperfections or tax effects exist

ABC currently has 650000 shares of stock outstanding that sell for $75 per share. Assuming no market imperfections or tax effects exist, what will the share peice and the total number of share after each of the following?

  Find the most difficult to value- value stock-growth stock

find the most difficult to value- a value stock, growth stock, dividend paying stock, IPO’s , international stocks, or any other types of stocks?

  Disclose the litigation in the financial statements

Pretty People Incorporated, is the defendant in a pending discrimination lawsuit. What information about the lawsuit would you, as an auditor, need to know to decide whether to disclose the litigation in the financial statements?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd