At time of purchase, a property investment is funded 60% through interest-only debt and 40% through equity. Over time, as the value of property increases, which of the following can be appropriate to describe the impact on property WACC and the discount rate? a. Ke, Kd and WACC remain unchanged b. Ke increases, Kd decreases, and WACC is unchanged c. Ke decreases, Kd increases, and WACC is unchanged d. Ke decreases, Kd is unchanged, and WACC decreases. e. Ke decreases, Kd is unchanged, and WACC increases

As a firm increases the amount of debt it uses to fund its assets the:Select one:a.WACC will continually decline.b.WACC will continually increase.c.cost of debt can be expected to rise.d.WACC will be unaffected.

A real estate development firm is considering several alternative development projects. These include building and leasing an office park, purchasing a parcel of land and building an office building to rent, buying and leasing a warehouse, building a strip mall, and building and selling condominiums. The financial success of these projects depends on interest rate movement in the next 5 years. The various development projects and their 5-year financial return (in $1,000,000s) given that interest rates will decline, remain stable, or increase, are shown in the following payoff table:interest rateproject decline stable increaseoffice park $0.50 $1.70 $4.50office building 1.5 1.9 2.5warehouse 1.7 1.4 1mall 0.7 2.4 3.6condominiums 3.2 1.5 0.6 Flag question: Question 4Question 4Tips2.25 ptsDetermine the best investment option using the Hurwicz criteria with 𝛼=0.3.Group of answer choicesmallcondominiumswarehouseoffice buildingoffice park Flag question: Question 5Question 5Tips2.25 ptsDetermine the best investment option using the maximin decision criteria.Group of answer choicesoffice buildingmallwarehousecondominiumsoffice park

An investment property is purchased for $18,540,000 with 50% equity and an interest-onlyloan to finance the balance. The average appreciation rate of the property is 5% per annumAll operating costs, including finance costs, are exactly equal to rent income. If the property issold after 10 years and selling costs are 3% of the sale price (based on market valuation ofdetermined from the annual rate of appreciation), the ROE (return on equity) is.

If a purchaser receives a 10% incentive of the home’s purchase price of $200,000, or $20,000 and their home value decreases to $150,000:Select one:a. they will still owe $20,000b. their debt will be reduced by 50%c. their repayment value will be 10% of the current value or $15,000.d. their debt will be erased

Explain how the following will affect• the investment decision,• the demand for loanable funds and• the interest rate in the loanable funds market.In your answer refer to the figure provided as appropriate and identify the correct change inthe investment and the interest rate. (Start from point A in Figure 3).Figure 3 Loanable funds marketDuring the test, you will be asked this question with a different example.ExampleThe depreciation rate in the economy increases.*********************************************************************************************************