A retail shopping center is purchased for $2.1 million. During the next five years, the property appreciates at 2 percent per year. At the time of purchase, the property is financed with a 70 percent loan-to-value ratio for 25 years at 6 percent (annual) with monthly amortization. At the end of year 5, the property is sold with 4 percent selling expenses. What is the before-tax equity reversion? a) $804,182 b) $826,937 c) $860,182 d) $870,581 e) $903,825

A retail shopping center is purchased for $2.1 million. During the next five years, the property appreciates at 2 percent per year. At the time of purchase, the property is financed with a 70 percent loan-to-value ratio for 25 years at 6 percent (annual) with monthly amortization. At the end of year 5, the property is sold with 4 percent selling expenses. What is the before-tax equity reversion? a) $804,182 b) $826,937 c) $860,182 d) $870,581 e) $903,825

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

$255,000 is borrowed to purchase a block of land. It is to be repaid with monthly repayments at 4.2% interest over 25 years: (HINT: Use AMORT on your calculator) (a) Calculate the monthly repayments. (b) How much interest is paid over the life of the loan? (c) How much is still owed at the end of 10 years?
Caddis Company acquired a building with a loan that requires payments of $19,000 every six months for 3 years. The annual interest rate on the loan is 8%. What is the present value of the building? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice O O O O $99,600 $114,000 $38,988 $65,402 $48,965
The Simpsons are moving into their new home. They purchased it for $250,000 by putting a down payment of $120,000 towards the purchase and paying the balance with a $130,000 mortgage amortized over 20 years at 6.75% per annum ( for a 3-year term). At the end of the 3-year term, the interest rate increased by 0.5%. What is the approximate increase in their monthly payment?
You just purchased a parcel of land for $40,000. To earn a 9% annual rate of return on your investment, how much must you sell the land for in 3 years? Assume annual compounding. (Round to nearest penny, e.g. 1234.56)
The annual debt service on a property is $25,000 and the pre-tax cash flow is $50,000. If the mortgage capitalization rate is 8.5% and the overall rate is 10%, what is the indicated value of the property?
A property was purchased for $3799.00 down and payments of $1377.00 at the end of every six months for 4 years. Interest is 6% per annum compounded quarterly. What was the purchase price of the property? How much is the cost of financing?
Island News purchased a piece of property for $1.82 million. The firm paid a down payment of 20 percent in cash and financed the balance. The loan terms require monthly payments for 20 years at an APR of 4.00 percent, compounded monthly. What is the amount of each mortgage payment?
After two years in business, the owners have saved (have a surplus of) $123,750.00. They must decide if they will invest in property or investment bonds. If they invest in a property and a vehicle, the total cost will be $445,500,00, of which $123,750.00 will be required as a down payment. The fixed interest rate on the mortgaged amount is 5.40% compounded semi-annually for a term of 13 years. 5. What is the size of the semi-annual payments required to settle this mortgage? 6. What is the size of the final payment? 7. How long would it take (in months) to settle this loan with regular monthly payments of exactly $2000 instead of the PMT value calculated in Part 5?
Suppose you obtain a 30 year mortgage loan of 197,000$ at an annual interest rate of 8.1%. The annual property tax bill is $967 and the annual fire insurance premium is 495$. Find the total monthly payment for the mortgage, property tax, and fire insurance.
The owner of a construction company purchased a cement mixer truck for $180,000 and made a down payment of $45,000. The remaining balance was financed for 10 years at an annual interest rate of 7.25% compounded monthly. Find the monthly payment (in dollars). (Round your answer to the nearest cent.)
A new home was purchased in Niagara Fall’s Butler Heights subdivision for $375,000 by Karen. The house is going to be financed by making a down payment of 15% and financing the balance with a conventional mortgage. The mortgage is to be amortized over 20 years with weekly payments. The rate chosen for the first four years of the mortgage is 2.79% compounded semi-annually. Show all work with formulas a) Determine the size of the weekly payments? b) What will the outstanding balance be after the first four years? c) Determine the size of the new weekly payment if after the first four year term she renews the mortgage using a fixed rate of 2.04% compounded semi-annually.

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