2. An office building has the following investment characteristics: Year 1 NOI $2,100,000 $2,200,000 $2,300,000 $2,400,000 Year 2 NOI Year 3 NOI Year 4 NOI Initial (going in) cap rate Loan Principal 7% $18,000,000 Interest rate 5% Amortization 30 years Exit cap rate Holding period 8% 3 years Solve for each of the following: Purchase price Loan to value ratio Annual debt service Debt service coverage ratio for year 1 Loan balance at the end of year 3 Equity IRR

2. An office building has the following investment characteristics: Year 1 NOI $2,100,000 $2,200,000 $2,300,000 $2,400,000 Year 2 NOI Year 3 NOI Year 4 NOI Initial (going in) cap rate Loan Principal 7% $18,000,000 Interest rate 5% Amortization 30 years Exit cap rate Holding period 8% 3 years Solve for each of the following: Purchase price Loan to value ratio Annual debt service Debt service coverage ratio for year 1 Loan balance at the end of year 3 Equity IRR

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EA: Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in...

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