A property is purchase for $15 million. Financing is obtained at a 75% loan-to-value ration with total annual payments of $1,179,000. The property produces an NOI of $1,400,000. What is the equity dividend rate ratio of first year cash flow to equity)?

Question

Quizplus · Accepted Answer

The equity dividend rate ratio is the ratio of the first year cash flow to equity to the total equity invested. In this case, the first year cash flow to equity is $1,400,000 - $1,179,000 = $221,000. The total equity invested is $15,000,000 * 25% = $3,750,000. Therefore, the equity dividend rate ratio is $221,000 / $3,750,000 = 5.89%.

A Property Is Purchase for $15 Million