The NOI for a small income property is expected to be $150,000 for the first year. Financing will be based on a 1.2 DCR applied to the first year NOI, will have a 10 percent interest rate and will be amortized over 20 years with monthly payments. The NOI will increase 3 percent per yearafter the first year. The investor expects to hold the property for five years. The resale price is estimated by applying a 9 percent terminal capitalization rate to the sixth-year NOI. Investors require a 12 percent rate of return on equity (equity yield rate) for this type of property.a. What is the present value of the equity interest in the property?b. What is the total present value of the property (mortgage and equity interests)?c. Based on your answer to part (b), what is the implied overall capitalization rate?

Suppose an industrial building can be purchased for $2,500,000 and is expected to yield cash flows of $180,000 in each of the next five years. (Note: assume payments are made at end of year.) If the building can be sold at the end of the fifth year for $2,800,000, calculate the IRR for this investment over the five-year holding period.   A) 0.09%. B) 4.57%. C) 9.20%. Page 4 of 6 D) 10.37%

Rashida has two investment choices. Alternative 1 requires an immediate outlay of $150,000 and offers a return of $417,000 after seven years. Alternative 2 requires an immediate outlay of $180,000 in return for which $25,000 will be received at the end of every six months for the next seven years. Alternative 3 requires an immediate outlay of $200,000 in return for which $60,000 will be received at the end of every year for the next seven years. The required rate of return on investment is 7.4% compounded semi-annually. What is Rashida's most preferred option? Alternative 1 Alternative 2 Alternative 3 Alternative 3 or Alternative 2, as both are essentially same Alternative 1 or Alternative 2, as both are essentially same . No hand written solution and no image

A property is expected to have NOI of $100,000 the first year. The NOI is expected to increase by 5 percent per year thereafter. The appraised value of the property is currently $1.25 million and the lender is willing to make a $1,125,000 participation loan with a contract interest rate of 5.5 percent. The loan will be amortized with monthly payments over a 20-year term. In addition to the regular mortgage payments, the lender will receive 50 percent of the NOI in excess of $100,000 each year until the loan is repaid. The lender also will receive 50 percent of any increase in the value of the property. The loan includes a substantial prepayment penalty for repayment before year 5, and the balance of the loan is due in year 10. (If the property has not been sold, the participation will be based on the appraised value of the property.) Assume that the appraiser would estimate the value in year 10 by dividing the NOI for year 11 by an 8 percent capitalization rate.   Assume that another…