PLEASE USE EXCEL AND SHOW THE FORMULAS TO SOLVE THESE QUESTIONS 1. You have been asked to analyze the acquisition of an office property for $10 million with the belowestimated NOI estimates at the end of each year and an assumption it will be sold at the end of the 3rdyear to an investor with 5.8% cap rate, which you will then incur selling expenses of 6%. RBS hasoffered you a 3-year $7 million interest-only loan at 6.5% to finance the acquisition with $40,000 inorigination fees.Year 1: $641,385 Year 2: $662,792Year 3: $679,231 Year 4: $690,692A. What is the unlevered Cash-On-Cash, Equity Multiple, IRR of the investment?B. What is the EBC, LTV, DCR, DYR of the acquisition with the $7 million loan?C. What is the required equity, levered Cash-On-Cash, Equity Multiple, IRR of the investment?

Given:- Acquisition of an office property for $10 million- NOI estimates: Year 1: $641,385, Year 2:…

Answered: 1. You have been asked to analyze the…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 8P

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You recently purchased an office building for $1,950,000 using the following loan terms: 70% LTV, 20-year amortization, 6.25% interest and monthly compounding. Assuming a net operating income of $150,000 in Year 1 and income taxes equal to $11,000, what is the expected ATCF from Operations in Year 1?
A builder is offering $127,574 loans for his properties at 9 percent for 25 years. Monthly payments are based on current market rates of 9.5 percent and are to be fully amortized over 25 years. The property would normally sell for $140,000 without any special financing. Required: a. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan? Assume that the buyer would have the loan for the entire term of 25 years. b. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan if the property is resold after 10 years and the loan repaid?
A builder is offering $137,381 loans for his properties at 9 percent for 25 years. Monthly payments are based on current market rates of 9.5 percent and are to be fully amortized over 25 years. The property would normally sell for $150,000 without any special financing. Required: a. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan? Assume that the buyer would have the loan for the entire term of 25 years. Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) b. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan if the property is resold after 10 years and the loan repaid? Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)
A builder is offering $117,767 loans for his properties at 9 percent for 25 years. Monthly payments are based on current market rates of 9.5 percent and are to be fully amortized over 25 years. The property would normally sell for $130,000 without any special financing. Required: a. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan? Assume that the buyer would have the loan for the entire term of 25 years. Complete this question by entering your answers in the tabs below. Required A At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan? Assume that the buyer would have the loan for the entire term of 25 years. (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) Sale value $ 116,134
You purchase a building that generates a stabilized NOI of $900,000 and has a capitalization rate of 8%. It has been financed with a mortgage loan of $6,750,000 with a 5-year term, a 25-year amortization and an interest rate of 6%. a) Calculate the Loan to Value (LTV) b) Calculate the Debt Service Coverage (DSCR). c) Calculate the loan balance at the end of one year. d) If you sell the building at the end of the year for $12,000,000 what is your Return on Equity (ROE)?
Manning Imports is contemplating an agreement to lease equipment to a customer for four years. Manning normally sells the asset for a cash price of $230,000. .Assume that 8% is a reasonable rate of interest. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) What must be the amount of quarterly lease payments (beginning at the commencement of the lease) in order for Manning to recover its normal selling price as well as be compensated for financing the asset over the lease term? (Round your answers to nearest whole number and round percentage answer to 1 decimal place.)
Assume that you are about to sell property (a vacant parcel of real estate) you own but otherwise have no use for. The net-of-sales-commission selling price for the property is $410,000. You are willing to finance this transaction over a 20-year period and have told the buyer that you expect an 11% pretax return on the transaction. The buyer has asked you for a payment schedule under several alternatives. Required: 1. What will be your periodic cash receipt, to earn a 11% return, if payments are received from the purchaser: NOTE: to answer the above questions, use the PMT function in Excel, as follows: PMT(rate,nper,pv,fv,type) where: rate is the interest rate for the loan, nper is the total number of payments, pv is the present value (i.e., the total amount that a series of future payments is worth now; also known as the principal), fv is the future value (or a cash balance you want to attain after the last payment is made; if fv is omitted, it is assumed to be 0 (zero)), and…
A builder is offering $139,371 loans for his properties at 9 percent for 25 years. Monthly payments are based on current market rates of 9.5 percent and are to be fully amortized over 25 years. The property would normally sell for $150,000 without any special financing. Required: a. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan? Assume that the buyer would have Give typing answer with explanation and conclusion
where a $70,000 loan could be assumed at a 9 percent rate with a remaining term of 15 years and payments of $709.99 per month. Recall that a comparable property with no special financing available would sell for $100,000 and could be financed at a market rate of 11 percent. How much more than $100,000 could the buyer pay if he or she chose to assume the 9 percent loan and still be as well off as if the property were purchased for $100,000 and financed with an 11 percent loan? We first find the present value of the payments that can be assumed using the market rate. This is the market value or cash equivalent value of the assumable loan. It represents the price at which the old loan could be sold to a new lender/investor.
A firm, whose cost of capital is 8 percent, may acquire equipment for $146,825 and rent it to someone for a period of five years. Note: Although payment of rent is typically considered to be an annuity due, treat it as an ordinary annuity when completing this problem in a spreadsheet or when using present value factors. If the firm charges $38,730 annually to rent the equipment, what are the net present value and the internal rate of return on the investment? Use Appendix D to answer the questions. Use a minus sign to enter negative values, if any. Round your answers for the net present value to the nearest dollar and for the internal rate of return to the nearest whole number. NPV: $ IRR: % Should the firm acquire the equipment? The firm acquire the equipment as the net present value is , and the internal rate of return the firm's cost of capital. If the equipment has no estimated residual value, what must be the minimum annual rental charge for the firm to earn the required 8…
An investor is considering buying a property for shillings 500,000. The cost of land is 20% of the purchase price. The building will however be depreciated over 40 years on a straight-line basis. The investor will take a loan of 50% of the purchase price at 10% per annum payable monthly for 20 years . The net operating income for the next 2 years is sh 40000 and sh 50000 . The property can be sold for 600,000 at the end of year 2. The tax on current income is 30% of the capital gain tax is 15% of price appreciation and 30% on price depreciation recapture.Required:Calculate the after tax equity IRR. IS THE PROJECT VIABLE ASSUMING THE INVESTOR HAS A REQUIRED RATE OF RETURN OF 15%.

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