An office building which generates $260,000 in Net Operating Income is advertised for sale at a price of $3,250,000.

After meeting with your lender they offer agreed to originate a loan of $2,600,000 which carries a 7% interest rate and a 30-year amortization period.

Your lender confirms the annual debt service for your loan will be $209,525.

a).Calculate theCash Throw-Offfor this investment.

What is the significance of the Cash Throw-off to an investor (i.e. what does it mean to them)?

b).Calculate theEquity Analysisfor this investment.

What does the equity analysis tell an investor?

Show your work andbrieflyexplain your reasoning.

c).Calculate theCash-on-Cash Returnfor this investment.

What is the significance of the Cash-on-Cash Return to an investor (i.e. what does it mean to them)?

Show your work andbrieflyexplain your reasoning.