Question

Fill in the $ blanks

LTVR Closing Costs V&C OE MARR 75% 5 points 10% 45% 15% Loan Term Cap Rate The Rate Interest Rate 10% 35% 6% Total Project Cost $4,000,000 Annual Depreciation: $ 160,000 Net Lease Rate Lensable Area 40.000 YEAR 1 Gross Potential income: $ Vacancy & Collections: Eective Gross income: $ Operating Expense Net Operating Income $ Loan Amounts Closing Costs Monthly PTS 5 Debt Service Before Tax Cash Flow 5 Net Operating Income Value $ 4.950.000 Loan Amounts Closing Costs: 5 Debt Service $ Monthly PMTE Before Tax Cash Flow Так $ Interest year 1) 221510 Aher Tax Cash Flow $ 187.980 After Tax Net Sales Proceeds $ 4.841.500 3.666.912 Rem Balance her yeart) Afer Tax Equity $ Capital Regids Net Present Value 5 Proceed Do Not Proceed

Answer 1

30 years LTVR Closing Costs V&C OE MARR 75% 5 points 10% 45% 15% Loan Term Cap Rate Tax Rate Interest Rate 10% 35% 6% Total Project Cost: $4,800,000 Annual Depreciation: $ 160,000 Net Lease Rate: $ 25/sflyr Leasable Area: 40,000sf YEAR 1 Gross Potential Income: $ 1,000,000 Vacancy & Collections: $ 100,000 Effective Gross Income: $ 900,000 Operating Expense: $ 405,000 Net Operating Income: $ 495,000 Value: $ 4950.000 Loan Amount: $ 3,712,500 Closing Costs: $ 185,625 Debt Service 205,800 Monthly PMTs: $ 28,257 Before Tax Cash Flow: $ 289,200 Tax: 101,220 Interest (year 1) $ 221.510 After Tax Cash Flow: $ 187 980 After Tax Net Sales Proceeds: $ 4,841.500 Rem. Balance: $ (after year 1) 3.666.910 After Tax Equity: $ 15,369,841 Investment Capital Req'd: $ 1.273.125 Net Present Value: $ Proceed Do Not Proceed

Based on the above calculation NPV will be calculated. And If the Minimum accepted rate of return is equal to or more than 15%, a proceed signal should be given to the mortgage option.

Note: After tax equity was calculated at 31.5% whic was arrived at as [0.35 x (1-0.90)]x100

Hence after tax equity was (4,841,500 / 31.5) x 100 = 15,369,841