Please clearly and thoroughly explain the steps on how you determine the expected levered-before-tax-annual rate of return on your capital and please determine the portion of the return that is expected from the annual cashflows and the portion that is expected as a result of property price appreciation. The Excel Spreadsheet is included as an attached image for the information. Thank You in advance! Apartment ComplexInputs:Acquisition PriceExpected 1st Year NOI"Going in" CAPCAP over (below) marketRequired Rate of ReturnExpected NOI GrowthTerminal NOI GrowthAcquisition Price + Closing Costs $End of year01Total2345678Amortization schedule:01234567891011121314151617181920I$2,890,000 Down Payment$149,991 Mortgage Rate5.19% Maturity0.50% Levered Required Return8.50% Minimum Required DCR3.50% Expected Treasury Yield2.90% Expected LT Inflation.2,962,250 Expected Risk Premium (bp)NOI$149,991$155,241$160,674$166,298$172,118$178,142$184,377$190,830$100,717$98,206$95,524$92,660$89,601$86,334$82,845$79,119$75,140$70,890$66,350$61,503$56,325$50,796$44,890$38,583$31,847$24,653$16,969$8,764$1,271,714PPAcquisition/Disposition($2,962,250)$3,195,084Total PV:NPV:IRR:Outputs:$ 1,481,125 Terminal CAP6.80% Loan Amount20 Mortgage Payment (Annual)11.00% DCR$62,502$66,752$71,292$76,139$81,317$86,846$92,752$99,059$105,795$112,989$120,672$128,8781.2 Mimimum DCR Satisfied?4.30% Mortgage Balance at Sale2.90%400CF($2,962,250)$149,991$155,241$160,674$166,298$172,118$178,142$184,377$3,385,915Ending balance$1,481,125$36,925 $1,444,200$39,436$1,404,763$42,118$1,362,645$44,982$1,317,663$48,041 $1,269,622$2,606,659-$355,5916.45%$51,308 $1,218,315$54,797$1,163,518$58,523$1,104,995$1,042,493$975,741$904,449I + P$828,310$746,993$660,146$567,394$468,335$362,540$249,551$128,878$0$1,481,125 $2,752,839PV of CF($2,962,250)$138,241$131,870$125,793$119,996$114,466$109,191$104,160$1,762,9425.900% Closing Fees$1,481,125 Comission$137,642 Closing Costs $1.09 Selling Expenses $No$1,104,995DS($137,642)($137,642)($137,642)($137,642)($137,642)($137,642)($137,642)($1,242,637)Total PV:NPV:IRR:Levered CF$ (1,481,125)$12,349$17,599$23,032$28,656$34,476$40,500$46,735$2,143,277$1,055,775($425,350)6.17%2.50%4.00%72,250133,128PV of Levered CF($1,481,125)$11,125$14,284$16,841$18,876$20,460$21,653$22,510$930,025

The levered NOI is the property's net operating income (NOI) after accounting for the interest…

Please clearly and thoroughly explain the steps on how you determine the expected levered-before-tax-annual rate of return on your capital and please determine the portion of the return that is expected from the annual cashflows and the portion that is expected as a result of property price appreciation. The Excel Spreadsheet is included as an attached image for the information. Thank You in advance!

Please clearly and thoroughly explain the steps on how you determine the expected levered-before-tax-annual rate of return on your capital and please determine the portion of the return that is expected from the annual cashflows and the portion that is expected as a result of property price appreciation. The Excel Spreadsheet is included as an attached image for the information. Thank You in advance!

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 90PSB

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