Question

Brian has grown tired of paying rent each month to his landlord and has decided to purchase a condo. Brian has been saving money and has $ 40.00 $40.00 that he will use as a down payment on this condo. He will take out a mortgage to pay the remaining price. Brian finds a suitable condo and negotiates a price of $ 250.00.

Upon moving in, how much equity does brian have in this condo?

a. 51025
b. 350463
c.299438
d. 0

What is Brian's leverage ratio associated with this condo when he moves in?

a. 299438
b. 5.868457
c. 0.1704026
d. 0.1455931

Answer 1

Step-by-step explanation:

1)

Equity is the owner's money in the investment or the amount Brian has saved up. In this case it is $40

2)

Leverage ratio is the ratio of debt and equity in an investment

Leverage ratio = Debt/Equity

Debt = Condo price - savings= 250 - 40= $210

Leverage ratio = $210/$40 = 5.25