Fight Finance

Courses  Tags  Random  All  Recent  Scores

Scores
keithphw$6,001.61
Yizhou$489.18
Visitor$442.43
Visitor$370.00
allen$340.00
Visitor$260.00
Donnal$190.00
Visitor$160.00
Visitor$150.00
Visitor$120.00
Visitor$119.09
Visitor$110.00
Visitor$100.00
Visitor$90.00
Visitor$60.00
Visitor$60.00
Visitor$56.09
Visitor$50.00
Koushik ...$43.45
Visitor$40.09
 

Question 941  negative gearing, leverage, capital structure, real estate

Last year, two friends Lev and Nolev each bought similar investment properties for $1 million. Both earned net rents of $30,000 pa over the past year. They funded their purchases in different ways:

  • Lev used $200,000 of his own money and borrowed $800,000 from the bank in the form of an interest-only loan with an interest rate of 5% pa.
  • Nolev used $1,000,000 of his own money, he has no mortgage loan on his property.

Both Lev and Nolev also work in high-paying jobs and are subject personal marginal tax rates of 45%.

Which of the below statements about the past year is NOT correct?




Copyright © 2014 Keith Woodward