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REFHW_8Fall2007

# REFHW_8Fall2007 - Real Estate Finance Homework Assignment#8...

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05/11/2009 Homework #8 REFHW#8Fall2007 Real Estate Finance Homework Assignment #8 Solutions Question #1: Operating Cash Flow: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Rental Revenues  \$750,000   \$787,500   \$826,875   \$868,219   \$911,630   \$957,211    less:  Vacancy Allowance  (75,000)  (78,750)  (82,688)  (86,822)  (91,163)  (95,721) Effective Gross Income  \$675,000   \$708,750   \$744,188   \$781,397   \$820,467   \$861,490    less:  Operating Expenses  (150,000)  (154,500)  (159,135)  (163,909)  (168,826)  (173,891) Net Operating Income \$525,000 \$554,250 \$585,053 \$617,488 \$651,640 \$687,599 Resale Cash Flow: Year 6 NOI capped @ 9%  \$7,639,988    less:  Selling expenses @ 3%  (229,200) Residual Cash Flow \$7,410,789

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05/11/2009 Homework #8 REFHW#8Fall2007 Question #2: Alternative #1 - Sell Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Sale Price Today  \$6,000,000    less:  Selling Expenses  (180,000)            Construction Loan Repayment  (4,500,000)
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REFHW_8Fall2007 - Real Estate Finance Homework Assignment#8...

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