Math_Practice_Exam_2_answers - 1 You bought a strip center...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
1. You bought a strip center that contains a Saver’s, Pizza Pit, H&R Block and several other stores. Purchase Price $4,000,000 Land Value $750,000 Vacancy & Collection Loss Year 2 5% Potential Gross Income Year 2 $250,000 Operating Expense (as a % of EGI) Year 2 30% Property Taxes Year 2 $35,000 Use Depreciation Period for commercial real estate. A. What will be the NOI in Year 2? __ $131,250 _____ B. What will be the taxable income on the property in Year 2? __ $47,917_______ C. What will the depreciation recapture tax be if you hold the property 5 years (assume a 25% recapture tax rate)? ___$104,167_____________ 2. You are mortgage shopping. Calculate the effective interest rate for each of the following $350,000 mortgages for a seven year time period. (That’s how long you expect to own the house.) A. MAD-DOG’S MORTGAGE CO.: fixed rate mortgage 5.5%, monthly compounding, with 4 points for a period of 30 years. ______6.24%_________ B. WILL “the Thrill” MORTGAGE CO.: fixed rate mortgage 5.5%, monthly compounding, with 3 points and an origination fee of $3,500 for a period of 15 years. ______6.34%_________ 3. You purchased an office building 4 years ago for $4,500,000 (debt free) and you project a Year-
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern