John presently owns an office building, which is 30 years old, and is considering renovating t 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 five-year holding period. Below is the information about the property and John's estimation if he does the renovation. RRENT RENOVATE 1.200,000 800,000 220,000 75.00% 9.00% Purchase Price Building Value Renovation Cost Initial Increase in NO 420,000 2000% 3.00% Resale Value after holding 5 years 1,823,000 Value l Increase in NO Loan-to-value ratio Interest Selling Expenses 3 00% of sale Term 30 yearsNew Loan: 12 of Renovation Costs Interest Rate Term 75.00% 11.00% 30 Payments per year since Purchased Current NOI Projected Increase in NOI Resale Value Today Depreciable Life 90,000 2.00% per y 1,450,000 39 years 28.00% 28.00% 0096 income tax rate Price appreciation tax rate eciation tax rate What is the annual loan payment if John does not renovate the property? o a $25,000 D.$60,598 O $86,899 o d $32,700 What is the annual loan payment if John does renovate the property? (Choose the nearest value) a $152,366 $179,769 $136,537 a) d. $188,152 QUESTION 6 What is the capital gain from property sale in year 8 if John does renovate the property? (Choose the nearest value) o a $217,949 b, $366,259 John presently owns an office building, which is 30 years old, and is considering renovating t 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 five-year holding period. Below is the information about the property and John's estimation if he does the renovation. RRENT RENOVATE 1.200,000 800,000 220,000 75.00% 9.00% Purchase Price Building Value Renovation Cost Initial Increase in NO 420,000 2000% 3.00% Resale Value after holding 5 years 1,823,000 Value l Increase in NO Loan-to-value ratio Interest Selling Expenses 3 00% of sale Term 30 yearsNew Loan: 12 of Renovation Costs Interest Rate Term 75.00% 11.00% 30 Payments per year since Purchased Current NOI Projected Increase in NOI Resale Value Today Depreciable Life 90,000 2.00% per y 1,450,000 39 years 28.00% 28.00% 0096 income tax rate Price appreciation tax rate eciation tax rate What is the annual loan payment if John does not renovate the property? o a $25,000 D.$60,598 O $86,899 o d $32,700 What is the annual loan payment if John does renovate the property? (Choose the nearest value) a $152,366 $179,769 $136,537 a) d. $188,152 QUESTION 6 What is the capital gain from property sale in year 8 if John does renovate the property? (Choose the nearest value) o a $217,949 b, $366,259
