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The NOI for the first year of your property is expected to be $100,000, and grow at 5% per year. You financed the property with a $500,000 mortgage at 8% and an amortization term of 20 years. If the selling costs are 5% and the outgoing cap rate is 10%, what is the before tax equity reversion if you sell at the end of year 5?

The NOI for the first year of your property is expected to be $100,000, and grow at 5% per year. You financed the property with a $500,000 mortgage at 8% and an amortization term of 20 years. If the selling costs are 5% and the outgoing cap rate is 10%, what is the before tax equity reversion if you sell at the end of year 5?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The NOI for the first year of your property is expected to be $100,000, and grow at 5% per year. You financed the property with a $500,000 mortgage at 8% and an amortization term of 20 years. If the selling costs are 5% and the outgoing cap rate is 10%, what is the before tax equity reversion if you sell at the end of year 5?
Transcribed Image Text:The NOI for the first year of your property is expected to be $100,000, and grow at 5% per year. You financed the property with a $500,000 mortgage at 8% and an amortization term of 20 years. If the selling costs are 5% and the outgoing cap rate is 10%, what is the before tax equity reversion if you sell at the end of year 5?
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