Equity Dividend Rate [2102]

What is the indicated capitalization rate using the band of investment method if the annual debt service is $14,366 on a property with a 75% loan-to-value ratio mortgage of $96,500 and a required equity dividend rate of 18%?  [2102]

Mortgage Constant = Debt Service / Mortgage Amount

Mortgage Constant = $14,366 / $96,500 = 0.14887

Cap Rate = ( 0.75 x 0.14887) + (0.25 x 0.18)

Cap Rate = (0.11165) + (0.045) = 15.67%