Answered: Please calculate the NOI

Business

Finance

Please calculate the NOI

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 4P

See similar textbooks

Similar questions

Your Team is evaluating whether to bid on an apartment complex. The complex is 180000 sq ft. The complex consists of 200 units: half are one bedrooms and the other half are two. The one bedrooms rent for $800 per unit per month and the two for $1,000. The complex is 15% vacant. The real estate expenses are $2.00 per square foot, CAM is $1.00 per square foot. Insurance and Management fees are .25 cents psf. The Capital escrow is $25,000 per year. Please calculate the NOI
I am interested in purchasing a 200 unit apartment in New Jersey for all cash. There are 100 one unit bedroom and 100 two unit bedroom. There are 93 one unit bedroom currently occupied and 95 unit 2 bedroom occupied The rent of one -unit bedroom currently is $2000 per month and two-unit bedroom is $2,700 per month. Market rent for one unit bed room is $ 1,700 and two-unit is $2,400 per month. Market vacancy rate is 3.5%. The property generates $30 per month per occupied flat unit. What will be the Gross operating Income for property.
You are an employee of University Consultants, Ltd., and have been given the following assignment. You are to present an investment analysis of a new small residential income-producing property for sale to a potential investor. The asking price for the property is $1,250,000; rents are estimated at $200,000 during the first year and are expected to grow at 3percent per year thereafter. Vacancies and collection losses are expected to be 10 percent of rents. Operating expenses will be 35 percent of effective gross income. A 70 percent loan can be obtained at 11 percent interest for 30 years. The property is expected to appreciate in value at 3 percent per year and is expected to be owned for five years and then sold. a. What is the investor’s expected before-tax internal rate of return on equity invested (BTIRR)?b. What is the first-year debt coverage ratio?c. What is the terminal capitalization rate?d. What is the NPV using a 14 percent discount rate? What does this mean?
You are considering a luxury apartment building project that requires an investment of $12,500,000. The building has 50 units. You expect that the maintenance cost for the apartment building will be $250,000 in the first year, and to rise to $300,000 in the second year, and to continue to increase by $50,000 in subsequent years. The cost to hire a manager for the building is estimated to be $80,000 per year. After five years of operation, the apartment building can be sold for $14,000,000. What annual rent per apartment unit will provide a return on investment of 15%? Assume that the building will remain fully occupied during the five years.
MAG Industrial needs 1000 square meters of storage space. Purchasing land for $80,000 and then erecting a temporary metal building at $70 persquare meter is one option. The president hopes to sell the land for $100,000 and the building for $20,000 after 3 years. Another option is to lease space for $30 per square meter per year payable at the beginning of each year. The MARR is 20%. Perform a present worth analysis of the building and leasing alternatives to determine the sensitivity of the decision if the construction cost decreases by 10% to $63 per square meter and the lease cost remainsat $30 per square meter per year.
ABC Residential Investors, LLP, is considering the purchase of a 120-unit apartment complex in Steel City, Pennsylvania. A market study of the area reveals that an average rental of $614 per month per unit could be realized in the appropriate market area. During the last six months, two very comparable apartment complexes have been sold in the same market area. The Oaks, a 140-unit project, sold for $9 million. Its rental schedule indicates that the average rent per unit is $578 per month. Palms, a 90-unit complex, is presently renting units at $678 per month, and its selling price was $6.6 million. The mix of number of bedrooms and sizes of units for both complexes is very similar to that of the subject property, and both appear to have normal vacancy rates of about 10 percent annually. All rents are net as tenants pay all utilities and expenses. Based on the data provided here, how would an appraiser establish an estimate of value? (Round intermediate calculations and final answers…
You are considering constructing a luxuryapartment building project that requires an investment of $15,500,000, which comprises $12,000,000for the building and $3,500,000 for land. The building has 50 units. You expect the maintenance cost forthe apartment building to be $350,000 the first yearand $400,000 the second year, after which it will continue to increase by $50,000 in subsequent years. Thecost to hire a manager for the building is estimatedto be $85,000 per year. After five years of operation,the apartment building can be sold for $17,000,000.What is the annual rent per apartment unit that willprovide a return on investment of 15% after tax?Assume that the building will remain fully occupiedduring the five years. Assume also that your tax rateis 35%. The building will be depreciated accordingto 39-year MACRS and will be placed in service inJanuary during the first year of ownership and sold inDecember during the fifth year of ownership.
ABC Residential Investors, LLP, is considering the purchase of a 120-unit apartment complex in Steel City, Pennsylvania. A market study of the area reveals that an average rental of $640 per month per unit could be realized in the appropriate market area. During the last six months, two very comparable apartment complexes have been sold in the same market area. The Oaks, a 140-unit project, sold for $9 million. Its rental schedule indicates that the average rent per unit is $630 per month. Palms, a 90-unit complex, is presently renting units at $730 per month, and its selling price was $6.6 million. The mix of number of bedrooms and sizes of units for both complexes is very similar to that of the subject property, and both appear to have normal vacancy rates of about 10 percent annually. All rents are net as tenants pay all utilities and expenses. Required: a. Based on the data provided here, how would an appraiser establish an estimate of value? (Round intermediate calculations and…
ABC Residential Investors, LLP, is considering the purchase of a 120-unit apartment complex in Steel City, Pennsylvania. A market study of the area reveals that an average rental of $640 per month per unit could be realized in the appropriate market area. During the last six months, two very comparable apartment complexes have been sold in the same market area. The Oaks, a 140-unit project, sold for $9 million. Its rental schedule indicates that the average rent per unit is $630 per month. Palms, a 90-unit complex, is presently renting units at $730 per month, and its selling price was $6.6 million. The mix of number of bedrooms and sizes of units for both complexes is very similar to that of the subject property, and both appear to have normal vacancy rates of about 10 percent annually. All rents are net as tenants pay all utilities and expenses. Required: a. Based on the data provided here, how would an appraiser establish an estimate of value of the oaks and palms property? (Round…
The firm paid $2,200,000 for the warehouse at that time. The owner, " Jack," (as the locals call him), decides if he wants to expand, he will need more space. He decides to expand the size of the current warehouse. This expansion will cost him about $300,000 to construct a new side to the building. Using the additional space wisely, Jack estimates that he will be able to generate about $70,000 more in sales per year, while incurring $41,500 in labor and variable costs of good What is the amount of the Net Capital Expenditure (NCS) on the project
Bold’s Gym, a health club chain, is consider-ing expanding into a new location: the initial investment would be $1 million in equipment, renovation, and a 6-year lease, andits annual upkeep and expenses would be $75,000 (paid at thebeginning of the year). Its planning horizon is 6 years out, andat the end, it can sell the equipment for $50,000. Club capacityis 500 members who would pay an annual fee of $600. Bold’sexpects to have no problems filling membership slots. Assumethat the interest rate is 10%. (See Table S7.2 .)a) What is the present value profit/loss of the deal? b) The club is considering offering a special deal to the mem-bers in the first year. For $3,000 upfront they get a full 6-year membership (i.e., 1 year free). Would it make financial sense tooffer this deal?
Peachtree Construction Company, a highway contractor, is considering the purchase of a new trench excavator that costs $300,000 and can dig a 3-foot-wide trench at the rate of 16 feet per hour. The contractor gets paid according to the usage of the equipment. $100 per hour. The expected average annual usage is 500 hours, and maintenance and operating costs will be $10 per hour. The contractor will depreciate the equipment by using a five-year MACRS, units-of-production method. At the end of five years, the excavator will be sold for $100,000.(a) Assuming that the contractor's marginal tax rate is 35% per year, determine the annual after-tax cash flow.(b) Is this a good investment if the contractor requires 15% return on investment?