# Math_Practice_Exam_2_answers - 1 You bought a strip center...

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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-

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