A property was purchased by an investor. The property is expected to produce $120,000 of annual net operating income in year 1: Increasing $10,000 every year thereafter. The owner intends to sell the property at the end of year 5.

1. Assuming the bank requires a 1.2 debt coverage service ratio based on the expected first year NOI, what will be the maximum monthly mortgage payment at the time of property acquisition?

2. Assuming the mortgage discussed in part (1) above is obtained, has a 6% interest rate and amortize over 30 years. What is the amount of mortgage principal obtained in connection with the property acquisition? (Note you will be need to use the information above to identify the "I", "N", and "PMT" in order to solve for "PV".

3. Based on the above scenario, what is the expected NOI for purposes of computing the value of the asset at the time of sale?

4. What is the value of the asset assuming the property will sell at a terminal (exit) cap rate of 5%?