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RE 3010 Real Estate Principles Assignment #4 Due: Apr 18 (Thurs) at 11:59pm on iColIege Question 1 You are considering the purchase of a shopping...

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RE 3010 — Real Estate Principles Assignment #4 Due: Apr 18 (Thurs) at 11:59pm on iColIege Question 1 You are considering the purchase of a shopping center for $5.5 million. The center’s first year
N01 is estimated to be $489,500. You borrow $4 million and your annual mortgage payment is $411,063.28. a) Calculate: cap rate, equity dividend rate, net income multiplier, debt coverage ratio, debt
yield ratio b) If your bank requires a minimum debt coverage ratio of 1.3, what is the maximum annual
mortgage payment you can afford? Question 2 You are considering the purchase of an apartment complex. a Purchase price: $775,000
a BTCF: - $103,085
$108,361 $113,875
$119,636 $125,651 Holding period is four years Cap rate is expected to be 7% in year 4 Selling expenses will be 5% of the sale price The 4-year Treasury bill rate is 3% and your risk premium for this project is 8% 3) Calculate the NPV of this project assuming that you do not take any mortgages
b) You take a $620,000 mortgage. Your annual debt payment is $54,593. The outstanding loan
balance at the end of year 4 is $596,558. Calculate the NPV of this project.

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