Question
A property is sold for $200,000. Typical financing terms are an 85% loan with a 10% interest rate over 15 years. If the before-tax cash
A property is sold for $200,000. Typical financing terms are an 85% loan with a 10% interest rate over 15 years. If the before-tax cash flow is $2,000, what is the overall capitalization rate?
The way I did it was N= 15, I/Y= 10 , PV= -0.85*200000= -170000 FV= 0 and PMT= 22350. Then NOI = 22350 + 2000 = 24 350
So cap rate = 24350/200000= 12.18% but this does not figure in the answer choices.
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Fundamentals Of Financial Management Concise
Authors: Eugene F. Brigham, Joel F. Houston
11th Edition
0357517717, 9780357517710
