What is your initial investment? What is your monthly loan payment? What is your loan balance after 5 years? What is your ADS? What is your year 1 NOI? What is your Year 1 before tax cash flow from operations? What is your going in cap rate? What is the first year cash on cash return for this investment? What is the first year Debt Coverage Ratio for this loan? What is the first year Debt Yield for this loan? What is the first year Break

What is your initial investment? What is your monthly loan payment? What is your loan balance after 5 years? What is your ADS? What is your year 1 NOI? What is your Year 1 before tax cash flow from operations? What is your going in cap rate? What is the first year cash on cash return for this investment? What is the first year Debt Coverage Ratio for this loan? What is the first year Debt Yield for this loan? What is the first year Break

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 1P

See similar textbooks

Similar questions

You have purchased a building for $12,000,000. There are ongoing NNN leases that will create a constant annual PGI of 1,700,000 with a Vacancy and Collection loss of 10%. Operating Expenses will be constant at 575,000 per year, and Capital Expenditures a constant 120,000 per year. You have obtained a 5-year, 4.5% partially amortizing loan at 65%LTV with 1.5 points that has a 25-year amortization period. You expect to sell this building for a net of $14,500,000 (i.e. after selling expense are paid) five years from today. Question a) What is loan amount and intial investment Question b) What is monthly loan payment and loan balance after 5 years? Question c) What is ADS and Net Operating income year 1?
You have purchased a building for $12,000,000. There are ongoing NNN leases that will create a constant annual PGI of 1,700,000 with a Vacancy and Collection loss of 10%. Operating Expenses will be constant at 575,000 per year, and Capital Expenditures a constant 120,000 per year. You have obtained a 5-year, 4.5% partially amortizing loan at 65%LTV with 1.5 points that has a 25-year amortization period. You expect to sell this building for a net of $14,500,000 (i.e. after selling expense are paid) five years from today. Question a) What is your before tax cash flow from selling this building and IRR this investment? Question b)For a 14% equity hurdle rate, what is the before tax NPV of this investment? Question c)If your lender was satisfied with a 1.5 Debt Coverage Ratio (regardless of LTV), what is the maximum loan amount you could have obtained?
An asset is planned to be purchased with an initial value of $400,000 and an estimatedsalvage value of $50,000 after 5 years of use. It will be depreciated using the straight-line method.With this asset $500,000 of annual income will be generated and there will beannual costs of $100,000The trem (minimum acceptable rate of return), m = 10% per yearThe annual tax rate is 40%Calculate the present value of this investment and make a recommendation. Please show your work
Company C is considering a leasing arrangement for an asset that has no value after its use for 3 years. It can borrow the value of the asset, at a 3-year simple interest loan of 10% with payments at the end of the year and buy the asset, or the company can make 3 equal end-of-year lease payments of $2,100,000 each and lease them. Annual maintenance costs associated with ownership are estimated at $240,000, but this cost would be borne by the lessor if it leases. What is the net advantage to leasing (NAL), if the firm's tax rate is 25%? (round to the nearest integer)(The Depreciation rate is 33.33% for Year 1, 33.33% for Year 2, and 33.33% for Year 3. The value of the asset $4,800,000)
Your firm requires an average accounting return (AAR) of at least 15 percent on all fixed asset purchases. Currently, you are considering some new equipment costing $96,000. This equipment will have a 3-year life over which time it will be depreciated on a straight line basis to a zero book value. The annual net income from this project is estimated at $5,500, $12,400, and $17,600 for the 3 years. Should you accept this project based on the accounting rate of return? Why or why not? a. no; because the AAR is equal to 15 percent b. yes; because the AAR is less than 15 percent c. yes; because the AAR is greater than 15 percent d. yes; because the AAR Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
A commercial property has PGI of $5 million, expenses of 40% of EGI and the vacancy is underwritten at 10%. What values would the following parameters suggest for the property. 70% LTV with a rate of 4.5% and 360 month amortization schedule. Given a property value of $45 million, calculate PGIM, EGIM, Cap Rate, Cash on Cash return and DSSCR.
A property was purchased by a property manager's client for $7,000, 000 with a $2, 000, 000 down payment and a 30 year. $ 5,000, 000 loan with a 7% interest rate. Grous potential income (GPI) for the property is expected to be $850, 000 in year one. Operating expenses are expected to be $350,000 in year one. Both are expected to increase by 3% each year. The property is expected to sell at the end of year five at a 7% going-out capitalization rate with 5% costs of sale. The investor's required rate of returns 12%.
A utility company is considering the following plans to provide certain service required by the present demand and the perspective growth of demand for the coming 18 yearsPlan R required immediate investment of P500,000 in property that has an estimated life of 18 years and with 20% terminal salvage value. Annual disbursements for operation and maintenance will be P50,000. Annual property taxes will be 2% of first cost.Plan S requires an immediate investment of P300,000 in property that has an estimated life of 18 years with 20% terminal salvage value. Annual disbursements for the operation and maintenance during the first 6 years will be P40,000. After 6 years, an additional investment of P400,000 will be required in property having an estimated life of 12 years with 40% terminal salvage value. After this additional property is installed, annual disbursement for operation and maintenance of the combined property will be P60,000. Annual property taxes will be 2% of the first cost of…
The Ziggy Trim and Cut Company can purchase equipment on sale for $4,300. The asset has a three-year life, will produce a cash flow of $1,200 in the first and second year, and -$3,000 in the third year. The interest rate is 12%. Calculate the project's NPV. a. -5,620.15 b. -4,407.28 c. 4,407.28 d. 8,463.40 e. 136.60 Clear my choice
The asking price for the property is $1,330,000; rents are estimated at $170,240 during the first year and are expected to grow at 2.5 percent per year thereafter. Vacancies and collection losses are expected to be 10 percent of rents. Operating expenses will be 35 percent of effective gross income. A fully amortizing 70 percent loan can be obtained at 6 percent interest for 30 years (total annual payments will be monthly payments × 12). The property is expected to appreciate in value at 2 percent per year and is expected to be owned for five years and then sold. The building represents 85 percent of value and would be depreciated over 39 years (use 1/39 per year, except year 1 depreciation is also multiplied by 11.5 / 12 to adjust for the mid month convention). The potential investor indicates that she is in the 37 percent tax bracket. Capital gains from price appreciation will be taxed at 20 percent and depreciation recapture will be taxed at 25 percent. What is the investor’s…
A firm can purchase a centrifugal separator (5-year MACRS property) for $22,000. The estimated salvage value is $4,000 after a useful life of six years. Operating and maintenance (O&M) costs for the first year are expected to be $2,200. These O&M costs are projected to increase by $1,000 per year each year thereafter. The income tax rate is 24% and the MARR is 11% after taxes. What must the uniform annual benefits be for the purchase of the centrifugal separator to be economical on an after-tax basis? CAN YOU DO THIS PROBLEM BY HAND? AND NOT USING EXCEL I WOULD REALLY APPRECIATE IT!!!!
An owner can lease her building for 100,000 per year for three years.aThe explicit cost of maintaining the building is cost 35,000 and the implicit cost is 50,000.All revenue are received and cost are borne at the end of each year.If the interest rate is 4 percent,determine the present value of the stream of: (I) accounting profit(II) ecenomic profits