Equity Dividend Rate [2100]

What is the indicated overall capitalization rate of a property having a $185,000 mortgage, NOI of $27,980, and debt service of $24,680 if the desired equity dividend rate is 15%?  [2100]

Equity dividend rate = Equity dividend / Equity

Equity dividend = $27,980 – $24,680 – $3,300

0.15 = $3,300 / Equity

Equity = $3,300 / 0.15 = $22,000

Value = $185,000 (mortgage) + $22,000 (equity) = $207,000

LTV = $185,000 / $207,000 = 89% and ETV = 11%

Cap Rate = (0.89 x 0.1334) + (0.11 x 0.15)

Cap Rate = (0.1187) + (0.0165) = 13.52%