Answered: If you are purchasing a building for…

If you are purchasing a building for $8,000,000 and the bank lends you $6,400,000 the Loan to Value is $1,600,000 65% 80% 100%

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 2MC

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

Bha

If you are purchasing a building for $8,000,000 and the bank lends you $6,400,000 the Loan to
Value is
$1,600,000
65%
80%
100%

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