implicity it is nterest-only loan. Without using mortgages, the equity investment return rate is 20%. Then, the stment return rate with using mortgages is X%. Calculate the value of X. (Hint: Use the formula we learned in our lecture.)

implicity it is nterest-only loan. Without using mortgages, the equity investment return rate is 20%. Then, the stment return rate with using mortgages is X%. Calculate the value of X. (Hint: Use the formula we learned in our lecture.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Economics
The value of a property is 10. The loan balance is 5 with the interest rate of 10%. For simplicity it is
the interest-only loan. Without using mortgages, the equity investment return rate is 20%. Then, the
investment return rate with using mortgages is X%. Calculate the value of X. (Hint: Use the formula
that we learned in our lecture.)

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