Exam_3_Practice_Math

# Exam_3_Practice_Math - Assuming a 7.5 interest rate with...

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Practice Math Questions – Exam 3 1) What annual NOI is required to obtain a \$10,000,000 loan with the following requirements: 1.30 Debt Service Coverage Ratio Market Cap rate of 8% 80% LTV 7 year term 20 year amortization 7% rate (monthly compounding) a) \$967,573 b) \$2,354,458 c) \$1,209,466 d) \$1,883,566 2) You are looking to purchase an apartment building on Colf Street. You know the NOI will be \$700,000 per year and the market capitalization rate for this type of building is 5%. UW Credit Union is willing to make you a loan to purchase the building (they agree with your NOI and market capitalization rate estimates). What is the largest loan amount the credit union will give you based on the following loan conditions? 50% LTV 1.30 Debt Service Coverage Ratio 15 year term 20 year amortization 6% rate (compounded monthly) a) \$7,000,000 b) \$5,317,465 c) \$6,263,240 d) None of the above 3) Eight years ago, you took out a loan with a 15 year term to purchase a residential apartment building in downtown Madison.

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Unformatted text preview: Assuming a 7.5% interest rate with amortization over 30 years and a monthly payment of \$3,496.07, calculate the balloon payment if you were to sell the property and pay off the loan today. • \$302,189 • \$451,391 • \$377,133 • Not enough information 4) Using the information from question 3 – what would be the After Tax Cash Flow from reversion given the following: • Loan was 75% LTV • Projected Year 9 NOI of \$63,000 • Terminal Capitalization Rate of 7% • 5% Cost of Sales • 15% Capital Gains on Appreciation Rate • Depreciation Recapture is \$30,000 a) \$796,750 b) \$345,359 c) \$855,000 d) Not enough information 5) Consider the following: • Purchase Price: \$600,000 • NOI (Year 1): \$60,000 • Income Tax (Year 1): \$15,000 • LTV: 65% • Monthly Rate: 7% • Amortization period: 25 years a) What is your DSCR? b) What is your Year 1 ATCF? Answers: 1 – C 2 – C 3 – B 4 – B 5a- 1.81 5b - \$11.923...
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## This note was uploaded on 04/09/2012 for the course REAL EST 306 taught by Professor Mccabe during the Spring '12 term at University of Wisconsin.

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Exam_3_Practice_Math - Assuming a 7.5 interest rate with...

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