1. You have been asked to analyze the acquisition of an office property for $10 million with the below estimated NOI estimates at the end of each year and an assumption it will be sold at the end of the 3rd year to an investor with 5.8% cap rate, which you will then incur selling expenses of 6%. RBS has offered you a 3-year $7 million interest-only loan at 6.5% to finance the acquisition with $40,000 in origination fees. Year 1: $641,385 Year 2: $662,792 Year 3: $679,231 Year 4: $690,692 A. What is the unlevered Cash-On-Cash, Equity Multiple, IRR of the investment? B. What is the EBC, LTV, DCR, DYR of the acquisition with the $7 million loan? C. What is the required equity, levered Cash-On-Cash, Equity Multiple, IRR of the investment?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter19: Lease And Intermediate-term Financing
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1. You have been asked to analyze the acquisition of an office property for $10 million with the below
estimated NOI estimates at the end of each year and an assumption it will be sold at the end of the 3rd
year to an investor with 5.8% cap rate, which you will then incur selling expenses of 6%. RBS has
offered you a 3-year $7 million interest-only loan at 6.5% to finance the acquisition with $40,000 in
origination fees.
Year 1: $641,385 Year 2: $662,792
Year 3: $679,231 Year 4: $690,692
A. What is the unlevered Cash-On-Cash, Equity Multiple, IRR of the investment?
B. What is the EBC, LTV, DCR, DYR of the acquisition with the $7 million loan?
C. What is the required equity, levered Cash-On-Cash, Equity Multiple, IRR of the investment?
Transcribed Image Text:1. You have been asked to analyze the acquisition of an office property for $10 million with the below estimated NOI estimates at the end of each year and an assumption it will be sold at the end of the 3rd year to an investor with 5.8% cap rate, which you will then incur selling expenses of 6%. RBS has offered you a 3-year $7 million interest-only loan at 6.5% to finance the acquisition with $40,000 in origination fees. Year 1: $641,385 Year 2: $662,792 Year 3: $679,231 Year 4: $690,692 A. What is the unlevered Cash-On-Cash, Equity Multiple, IRR of the investment? B. What is the EBC, LTV, DCR, DYR of the acquisition with the $7 million loan? C. What is the required equity, levered Cash-On-Cash, Equity Multiple, IRR of the investment?
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