$\begin{array}{rrr}
\begin{array}{l}
\
\text { NOI } \
\text { DS } \
\text { Cash flow } \
\text { Resale in year } 3 \
\text { Less mortgage balance } \
\text { Total cash flow } \
\text { Present value of cash flow @ } 15 \%
\end{array}
\begin{array}{rrr}
\text { Year 1 } & \text { Year 2 } & \text { Year 3 } \
\$ 72,000 & \$ 74,880 & \$ 77,875 \
60,000 & 60,000 & 60,000 \
\hline \$ 12,000 & \$ 14,880 & \$ 17,875 \
& & 900,000 \
& & -435,000 \
\hline \$ 12,000 & \$ 14,880 & \$ 482,875 \
\$ 10,435 & \$ 11,251 & \$ 317,498
\end{array}
\end{array}$
-Using the information from the question above, what would be the equity dividend rate?

Question

Quizplus · Accepted Answer

The equity dividend rate is calculated as the first year's cash flow divided by the initial equity investment. Here, the first year's cash flow is $12,000. Assuming the initial equity investment is the present value of cash flows, $12,000 / $317,498 = 3.5%.

-Using the Information from the Question Above, What Would Be