21& 22

Commercial Real Estate Investment Use the following information in questions 21 and 22. Bob buys a property that costs $1,000000 Bob will own the property for two years. The NOI from the property for years 1-3 is the following: Year 1 2 3 NOI $100,000 S105,000 $110,000 Bob will sell the property at the end of year 2 at a cap rate that is 250 basis points lower than the cap rate at which he bought the property 1,571,666.67 105,000 70,000 174,768.52 110,000 QUESTION 22 Assume Bob finances his purchase with a 50% LTV Fixed Rate 10 loan at an annual rate of 5% with annual compounding and annual payments. Fine NPV of Bob's investment if his discount rate is 20%. 52.38