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3 [8 pt] You are considering the purchase of a 50,000 square-foot office building with an asking price of $10,000,000. Rent per square foot is

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3 [8 pt] You are considering the purchase of a 50,000 square-foot office building with an asking price of $10,000,000. Rent per square foot is $40.00, vacancy is 158 and operating expense/ capital expenditures is 528 of effective gross income. You are considering injecting equity to the tune of 20% of the purchase price and borrowing the balance. Typical financing is 7% per year for 10 years, amortized over 25 years. The lender requires a Debt Coverage Ratio (DCR) of 1.35. (i) Would you qualify for the loan amount you are seeking under the lender's DCR constraint? Show your computations clearly. (6 pt) (ii) If not, how much more equity will you need to inject under the maximum loan possible? (2 pt)

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