The property under study is a block of apartments in Limassol that is rented short – term but on a monthly basis. The building started operating two years ago on a 20 - year FRI (Full Repairing and Insuring) lease with 4-year rent reviews. The Passing Rent of the property is €115,000 and the market rent is estimated today at €120,000 per year. You should estimate the ARY and support your opinion by making some logical assumptions. Assume 0% rental growth the next 4 years, 3% for the subsequent 4 years and 1% rental growth for the remaining period. Estimate the value of the freehold using excel: 1) Traditional Term & Reversion Method 2) Traditional Hardcore/Layer Method

The property under study is a block of apartments in Limassol that is rented short – term but on a monthly basis. The building started operating two years ago on a 20 - year FRI (Full Repairing and Insuring) lease with 4-year rent reviews. The Passing Rent of the property is €115,000 and the market rent is estimated today at €120,000 per year. You should estimate the ARY and support your opinion by making some logical assumptions. Assume 0% rental growth the next 4 years, 3% for the subsequent 4 years and 1% rental growth for the remaining period. Estimate the value of the freehold using excel: 1) Traditional Term & Reversion Method 2) Traditional Hardcore/Layer Method

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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Suppose you want to purchase a property for $205,000 and you have $30,000 to put down as a down payment. The property has an existing mortgage that can be wrapped. This loan is a fixed-rate mortgage at 7 percent, monthly payments. This loan had an original balance of $150,000 and has 20 years remaining on its original 30-year term. The current market rate for a new fixed-rate loan is 10.50 percent for 20 years. The seller will give you a wrap loan for an amount equal to the purchase price minus the down payment at 8.75 percent, monthly payments. What is the effective equity yield for the wrap lender if the wrap loan is written for a term equal to the remaining term of the existing mortgage and both are held to maturity?
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You need a particular piece of equipment for your production process. An equipment - leasing company has offered to lease the equipment to you for $9 comma 700 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed here: LOADING... (the equipment has an economic life of 5 years). If your discount rate is 7.2 %, what should you do? \table[[Year 0, Year 1, Year 2, Year 3, Year 4, Year 5], [-$40, 200, $2,100, -$2,100,- $2,100, - $2,100, - $2,100 c Year 0 - $40,200 Year 1 - $2,100 Year 2 - $2,100 Year 3 Year 4 Year 5 - $2,100 - $2,100 - $2,100
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