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Just 2 questions, answer in Excel and provide steps, thank you. 1. Calculate Going-in Cap Rate (Ro) 2. Calculate the Equity Dividend Ratio (EDR) You
Just 2 questions, answer in Excel and provide steps, thank you.
1. Calculate Going-in Cap Rate (Ro)
2. Calculate the Equity Dividend Ratio (EDR)
You are considering purchasing a small office building for $1,975,000 Your expectations include: - First-year gross potential income of $340,000; - Vacancy & collection losses equal to 15% of PGI; - Operating expenses = 40% of EGI; - Capital expenditures 5% of EGI - $1,481,250 mortgage (75% LTV) @ 7% - Mortgage will be amortized over 25 years with a monthly payment of $10,469.17 - Total up-front financing costs = 2% of the loan amount - Required equity investment is $523,375 [$1,975,000- ($1,481,250 - $29,625)]Step by Step Solution
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