Your own a warehouse financed at a current weighted average cost of capital equal to 8%. You have a second mortgage at

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Your own a warehouse financed at a current weighted average cost
of capital equal to 8%. You have a second mortgage at a fixed
rate of 10% representing 20% of the capital stack. You were
successful in negotiating a new ten-year lease with your single
tenant, so you approach your second mortgage lender with a proposal
to reduce the interest rate on the second mortgage to a fixed rate
of 8%. Your second mortgage lender agrees. Calculate
the change to your weighted average cost of capital.
Question 16 options:
There is not enough information provided to make the
calculation.
It went down by 200 basis points
It went up by 200 basis points
It went down by 40 basis points
You project a leveraged IRR of 25%, assuming a debt to value
ratio of 60%. The interest rate on your debt is 8%.
Increasing the debt to value ratio to 70% would
Question 17 options:
decrease the leveraged IRR.
not be feasible.
not impact the leveraged IRR.
Increase the leveraged IRR.