Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

excel format Actual Project Assumptions: Consider the following loan information Total acquisition price: $3,000,000 Property consists of twelve office suites, five on the first floor

excel format
image text in transcribed
Actual Project Assumptions: Consider the following loan information Total acquisition price: $3,000,000 Property consists of twelve office suites, five on the first floor and seven on the second Contract rents: three suites at $2,400 per month, two at $3,000 per month, and seven at $1,330 per month Annual market rent increases: 3% per year. Vacancy and collection losses: 5% per year. Operating expenses: 35% of effective gross income each year. Capital expenditures: 6% of effective gross income each year. Expected holding period: 5 years. Expected selling price in year 5: Year 6 NOI capitalized at 5% Selling expenses in year 5: 3% of the sale price. First mortgage loan: 75% LTV. Annual mortgage interest rate: 4.5%. Loan term and amortization period: 25 years (monthly payments). Total up-front financing costs: 2% of loan amount Required return: 9% 1. Create a five-year operating pro forma which calculates BTCF and BTER. 2. Calculate the NPV and IRR of the project based on the levered cash flows. 3. Calculate the project NPV of levered cash flows based on the following required retur assumptie 10%, 12%, 14%, 16%, 18%, and 20%. 4. Calculate the project NPV at 9% and IRRs for levered cash flows based on the following LTV assumptions: 0% 60% 70%, 75%, 80%, 85%, and 90% 5. Calculate the project IRRs for levered cash flows based on the following PGI growth rate assumptions: -1% +1% +3% +5%, and +7% Complete #5 above for initial LTV ratios of 0% 60%, 75%, and 90% Actual Project Assumptions: Consider the following loan information Total acquisition price: $3,000,000 Property consists of twelve office suites, five on the first floor and seven on the second Contract rents: three suites at $2,400 per month, two at $3,000 per month, and seven at $1,330 per month Annual market rent increases: 3% per year. Vacancy and collection losses: 5% per year. Operating expenses: 35% of effective gross income each year. Capital expenditures: 6% of effective gross income each year. Expected holding period: 5 years. Expected selling price in year 5: Year 6 NOI capitalized at 5% Selling expenses in year 5: 3% of the sale price. First mortgage loan: 75% LTV. Annual mortgage interest rate: 4.5%. Loan term and amortization period: 25 years (monthly payments). Total up-front financing costs: 2% of loan amount Required return: 9% 1. Create a five-year operating pro forma which calculates BTCF and BTER. 2. Calculate the NPV and IRR of the project based on the levered cash flows. 3. Calculate the project NPV of levered cash flows based on the following required retur assumptie 10%, 12%, 14%, 16%, 18%, and 20%. 4. Calculate the project NPV at 9% and IRRs for levered cash flows based on the following LTV assumptions: 0% 60% 70%, 75%, 80%, 85%, and 90% 5. Calculate the project IRRs for levered cash flows based on the following PGI growth rate assumptions: -1% +1% +3% +5%, and +7% Complete #5 above for initial LTV ratios of 0% 60%, 75%, and 90%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials Of Financial Management Text And Cases

Authors: George C Philippatos

1st Edition

0816267162, 978-0816267163

More Books

Students also viewed these Finance questions

Question

20. Why is address alignment important?

Answered: 1 week ago