(a)
PV
FV
n
i
PMT?
-$ 140,000.00
0
360
0.833%
$1,228.60
n
i
PMT
PV
300
0.833%
$1,228.60
$135,204.05
n
i
PMT
FV
300
0.917%
$1,228.60
0
PV
$125,352.90
*SMPC should pay the market value price of $125,352.90
(b)
PV
FV
n
i
PMT?
-$ 140,000.00
$127,220.60
120
0.
1
First Year Rent/ sq feet
Increase/ year
Discount Rate
15
1.5
0.1
Year
Rent
PV OF RENT
Effective Value of rent
1
15
2 First Year Rent/ sq feet
Increase/ year
Discount Rate
$67.15
$17.72
PV OF RENT
Effective Value of rent
1
$16.00
3 First Year Rent/ sq fe
House Price
$ 100,000.00
$ 100,000.00
Loan A
Loan B
LTV
A)Incremental Borrowing Cost
N
PV
PMT
FV
i?
-$
80% $
90% $
Loan AMT
80,000.00
90,000.00
i
n
0.67%
0.71%
300
300
0.7%
300
300
10,000.00
$107.25
0
1.02170%
IBC:
12.26%
B) How would IBC change if Loan B
Principal
Loan A
Loan B
-75000
-75000 i
N
0.50%
0.58%
Loan Balance (20 yrs)
A
$40,502.69
B
$42,975.06 Loan Balance (5yrs)
240
60
$69,790.77
$70,598.69
1) If the loan is repaid after 20 yrs, better choice?
Loan A
N
PMT
PV
FV
i?
LOAN B
N
PMT
PV
FV
i?
240
$4
A)
AMT
i
n
PMT?
N
PMT
PV
FV
i?
Loan A
-$ 180,000.00
0.750%
240 Loan B
$1,619.51 -$ 40,000.00
1.08%
240
240
$2,088.14
$468.63
-$ 220,000.00
0
0.813%
EBC:
9.76%
B)LOAN BALANCE AFTER 5 YEARS:
Loan A
*This makes the $220,000 loan more attrative
AMT
-$ 180,000
1.)Executive Summary
The detailed analysis that we used for our case included the use of an excel
document that ultimately found us the leveraged return on the investments that
were found broken down into the amount that would be received in the propertie