1 & 2

RE 3010-Real Estate Principles Assignment #4 Due: Apr 18 (Thurs) a:59pm on iCollege Question 1 You are considering the purchase of a shopping center for S5.5 million. The center's first year NOI is estimated to be $489,500. You borrow $4 million and your annual mortgage payment is S411,063.28. Calculate: cap rate, equity dividend rate, net income multiplier, debt coverage ratio, debt yield ratio If your bank requires a minimum debt coverage ratio of 1.3, what is the maximum annual mortgage payment you can afford? a) b) Question 2 You are considering the purchase of an apartment complex .Purchase price: $775,000 BTCF Year NOI 103,085 $108,361 113,875 $119,636 $125,651 Holding period is four years Cap rate is expected to be 7% in year 4 Selling expenses will be 5% of the sale price The 4-year Treasury bill rate is 3% and your risk premium for this project is 8% * a) Calculate the NPV of this project assuming that you do not take any mortgages b) You take a S620,000 mortgage. Your annual debt payment is $54,593. The outstanding loan balance at the end of year 4 is S596,558. Calculate the NPV of this project