Unformatted text preview: 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 we have positive cash flow leverage. 11. Leveraged No leverage LR = 2 LR = 1 Equity Investment $100,000 $200,000 Scenario Optimistic Pessimistic Optimistic Pessimistic BTCF $25,000 $15,000 $35,000 $25,000 Return on Equity 25% 15% 17.5% 12.5%...
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- Spring '11
- Generally Accepted Accounting Principles, Basic financial concepts, positive cash flow, cash flow return