11. A property is expected to have an NOI of $143,000. ADS on the existing loan is $100,000, and the loan balance is $875,000. The investor desires a 10% rate of return. What is the investment value for this client? 12. A property is expected to have an NOI of $85,000. ADS on the existing loan is $53,000, and the loan balance is $645,000. The investor desires a 7% rate of return. What is the investment value for this client? ACTIVITY: DERIVING THE CAPITALIZATION RATE Your client is considering selling a property which has the following financials: NOI = $185,000 Current Loan Balance = $700,000 ADS = $85,000 Investors are requiring a cash-on-cash rate of return of 6%. Loans are currently available with a 25 year amortization, eight year due date at a rate of 9.5% for an 80% LTV% ratio. Three sales of comparable buildings have occurred in the past month: Sale 1: Sale Price = $1,515,000 NOI = $144,226 Sale 2: Sale Price = $1,402,500 NOI = $137,163 Sale 3: Sale Price = $1,561,000 NOI = $154,660 13. Calculate the average capitalization rate from comparable sales (multiply by 100 to arrive at a capitalization rate to two decimal places). 14. Use the capitalization rate to find the market value of the property. 15. Your client also requires a 6% cash-on-cash rate of return. Use the equity capitalization model to determine your client's investment value. 16. Based on your calculations, would you recommend that your client sell City Tower I at this time? Why or why not