This lesson focused on leverage and borrowed money. Using examples and solving illustrative problems, we have learned:
- how to conduct a leveraged investment analysis;
- the concept and organization of a joint venture;
- how to analyze land/real estate investment with leverage; and
- the relationship between the minimum rate of return and leverage.
The rule of leverage we have learned is to never borrow money when you have a sufficient treasury to finance investments on a 100% equity basis unless the portion of your treasury equal to the borrowed money amount can be put to work at a DCFROR, which is more than the after-tax cost of borrowed money.
Reminder - Complete all of the Lesson 10 tasks!
You have reached the end of Lesson 11! Double-check the to-do list on the Lesson 10 Overview page to make sure you have completed all of the activities listed there before you begin Lesson 12.