Loss-Recovery Asymmetry & Survival

Calculates the gain needed to recover a given loss of capital and the equity cushion that survives a value decline at a given leverage level. The inputs are the loss percentage and the loan-to-value ratio.

By Devon Coombs, CPA, MBA · Teaching Professor of Finance, Santa Clara University · Reviewed August 2026

From the author: Devon Coombs, CPA, MBA teaches finance at Santa Clara University and works with corporate teams on practical AI.

AI training for finance teams · Consulting · The 10 Laws of Finance

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Loss-Recovery Asymmetry & Survival

Recovery math

Loss of capital

Gain needed to break even

100%

1 ÷ (1 − 0.50) − 1

25% lossneeds33% gain

50% lossneeds100% gain

75% lossneeds300% gain

90% lossneeds900% gain

Equity cushion (survival)

Loan-to-value

Value decline that wipes out equity

35%

1 − LTV = 1 − 0.65

Losses are asymmetric, so survival comes before upside. Lower leverage widens the cushion: at 65% LTV the equity absorbs a 35% value decline; at 80% LTV, only 20%. Protect the downside first, then pursue value-add.

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This calculator comes from the free Real Estate Finance course, where the concept is taught with readings, worked examples, and practice questions.

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Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.