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An investor is considering the purchase of a property for $1 million

Accounting

An investor is considering the purchase of a property for $1 million. Based on the $1 million price, the property has a cap rate of 10%. The investor can obtain an interest-only mortgage loan at 8.0%. Suppose the investor borrows 75% of the price to acquire the property. What is the maximum price the investor could pay for the property before debt financing has a negative effect on the equity cash yield?

 

Group of answer choices

 

$1,250,000

 

$1,300,500

 

$1,300,800

 

$1,400,400

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