End of Chapter 16 Questions and Answers

Loan to Value ratio gives the ratio of debt to property value (LR=L/V) ... Answer: The mortgage constant reflects the return on and to debt capital. It is a reflection of the cost of debt and as such the total return to equity should exceed the mortgage constant. If the cap rate exceeds the mortgage constant then the cash flow return to equity will also be higher than the mortgage constant and ... ................
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