Suppose we have the following real estate speculation scenar…

Suppose we have the following real estate speculation scenario for a 1 year investment: Purchase price of house: $170,000 Equity: $120,000 Debt: $50,000 @10% interest Interest Payments: $5,000   What is the leverage ratio in this scenario? Suppose that real estate prices are increasing. All else being equal, what would happen if the leverage ratio increased?