Efficiency Analysis of Taking out Real Estate Loans for Profit-Making Organizations

Abstract

This article presents modified factors to analyze efficiency of getting real estate loans by profit-making organizations. These factors make allowance for the characteristic features of real estate lending transactions such as their long-termness, and uneven stream of cash-flows. Total value of net cash return from a real estate lending transaction is typically discounted revenue, which we calculated both pretax and post-tax. Taxation is shown to exert a considerable impact on discounted revenue position. Real estate lending transaction financial leverage effect is calculated for the whole duration of the investment project, with allowance for time value of money.

DOI: 10.5901/mjss.2014.v5n24p70