John presently owns an office building, which is 30 years old, and is considering renovating it. Assume that if John does the renovation, he will be able to obtain a new loan that is equal to the balance of the existing loan plus 75% of the renovation costs. Assume a five-year holding period. Below is the information about the property and John's estimation if he does the renovation. 400,000 20.00% 3.00% 1,523,000 3.00% of sale price CURRENT Purchase Price Building Value Land Value Loan-to-value ratio Interest Term Payments per year Years since Purchased Current NOI (year 4) Projected Increase in NOI Resale Value Today Depreciable Life Ordinary income tax rate Price appreciation tax rate Depreciation recapture tax rate IF RENOVATED 1,000,000 Renovation Cost 800,000 Initial Increase in NOI (year 4) 200,000 Annual Increase in NOI 75.00% Resale Value after holding 5 years 9.00% Selling Expenses 30 years New Loan: 12 Interest Rate 3 Term 90,000 Payments per year 2.00% per year 1,050,000 39 years 28.00% 28.00% 28.00% 11.00% 30 years 12 What is the mortgage balance by the end of year 8 if John does renovate the property? (Choose the nearest value) O $965,662 O $1,152,233 O $1,003,848 O $954,230