In the market described in the previous question, what would be the investment value IV) of a property whose initial PBTCF is $100/yr, for an intra-marginal investor who faces a 10% tax rate and who would use the same 50% LTV financing?

Question

Quizplus · Accepted Answer

The investment value (IV) can be calculated using the initial pre-tax cash flow (PBTCF), the investor's tax rate, and the financing details. Given a PBTCF of $100/year, a tax rate of 10%, and 50% loan-to-value (LTV) financing, the correct calculation would adjust the PBTCF for the tax rate and apply the appropriate capitalization rate based on the financing structure. Without the specific formula or additional details provided in the "previous question," the correct answer is inferred based on typical financial analysis principles. However, the choice that seems to align with a reasonable outcome from such a scenario, given standard real estate investment calculations, is $1328, assuming it reflects a proper application of these principles.

In the Market Described in the Previous Question, What Would