5 pt question. show work An investor is considering the purchase of an office property in Center City Philadelphia. Here are the relevant assumptions regarding the purchase:

1. What is the Purchase Price?
   1. $9 million
   2. $10 million
   3. $11 million
   4. $12 million

2. What is the expected unlevered return (IRR) on the investment?
   1. 9.00%
   2. 7.33%
   3. 7.22%
   4. 5.88%

3. What is the unlevered Standard Deviation of the investment?
   1. 1.11%
   2. 1.83%
   3. 3.00%
   4. 2.87%

4. How much did expected return increase by adding leverage?
   1. 2.18%
   2. .05%
   3. 5.73%
   4. 12.52%

5. The addition of leverage increases risk and potential returns or losses.
   1. True
   2. False

NOI Probability Going In Cap Rate Exit Cap Growth Year of Sale LTV Interest Rate on Debt Interest Only Years Amortization Optimistic Base Case Pessimistic 500,000 500,000 500,000 25% 50% 25% 5.00% 5.00% 5.00% 5.00% 5.50% 5.75% 4.0% 3.0% 2.0% 10 10 10 60% 60% 60% 4.0% 4.0% 4.0% 10 10 10 Yearly Yearly Yearly NOI Probability Going In Cap Rate Exit Cap Growth Year of Sale LTV Interest Rate on Debt Interest Only Years Amortization Optimistic Base Case Pessimistic 500,000 500,000 500,000 25% 50% 25% 5.00% 5.00% 5.00% 5.00% 5.50% 5.75% 4.0% 3.0% 2.0% 10 10 10 60% 60% 60% 4.0% 4.0% 4.0% 10 10 10 Yearly Yearly Yearly