Business, 24.03.2021 17:20 aly5839

The NOI for a small income property is expected to be $150,000 for the first year. Financing will be based on a 1.2 DCR applied to the first year NOI, will have a 10 percent interest rate, and will be amortized over 20 years with monthly payments. The NOI will increase 3 percent per year after the first year. The investor expects to hold the property for five years. The resale price is estimated by applying a 9 percent terminal capitalization rate to the sixth-year NOI. Investors require a 12 percent rate of return on equity (equity yield rate) for this type of property. Required:
a. What is the present value of the equity interest in the property?
b. What is the total present value of the property (mortgage and equity interests)?
c. Based on your answer to part (b), what is the implied overall capitalization rate?

Answers: 1

Show answers

Other questions on the subject: Business

Business, 21.06.2019 20:30, gtamods402

What does the phrase limited liability mean in a corporate context?

Answers: 2

continue

Business, 22.06.2019 19:30, hmae2304

Alaska king crab fishing in the 1960s and '70s was a dangerous but rich fishery. boats from as far away as california and japan braved the treacherous gulf of alaska crossing to reach the abundant king crab beds in cook inlet and bristol bay. suddenly, in the early 1980s, the fishery crashed due to over fishing. all crabbing in those areas ended. to this day, there is no crabbing in bristol bay or cook inlet. a. how would an economist explain the decline of the alaska king crab fishery

Answers: 3

continue

Business, 22.06.2019 21:20, dorianhenderson987

Label each of the following statements true, false, or uncertain. explain your choice carefully. a. workers benefit equally from the process of creative destruction. b. in the past two decades, the real wages of low-skill u. s. workers have declined relative to the real wages of high-skill workers. c. technological progress leads to a decrease in employment if, and only if, the increase in output is smaller than the increase in productivity. d. the apparent decrease in the natural rate of unemployment in the united states in the second-half of the 1990s can be explained by the fact that productivity growth was unexpectedly high during that period.

Answers: 3

continue

Business, 22.06.2019 21:30, marlenerojas201

Which of the following is one of the five fundamental questions? which products will be in scarce supply and which in excess supply? who should appoint the head of the central bank? how much should society save? correct what goods and services will be produced?

Answers: 1

continue

You know the right answer?

The NOI for a small income property is expected to be $150,000 for the first year. Financing will be...