Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A developer is offering loans on new properties at 9% for 25 years. However, her current required rate of return for the project is 9.5%.
A developer is offering loans on new properties at 9% for 25 years. However, her current | ||||||||||
required rate of return for the project is 9.5%. The property would normally sell for | ||||||||||
$110,000 without any special financing and 100% LTV loan |
a. | At what price should the builder sell the properties to earn, in effect the required | |||||||||
rate of return on the loan? Assume that the builder would have the loan for the | ||||||||||
entire term of 25 years |
b. | How would the answer change in (a) if the property is expected to be sold after 10 years | ||||||||||
and the loan repaid |
use excel
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started