Question
ou are considering the purchase of an apartment building that has 25 units that can be rented out at $1,500 per month. You have estimated
ou are considering the purchase of an apartment building that has 25 units that can be rented out at $1,500 per month. You have estimated operating expenses and expected vacancy and collection losses for the first year to be $55,000 and $50,000, respectively. You also have estimated that you will be able to generate an additional $7,500 in the first year from garage rentals on the property. If the expected purchase price of the property is $3,250,000 and you are planning on making a 20% down payment, calculate the debt yield ratio assuming the interest rate is 6%
a) 10.8%
b) 13.60%
c) 30.2%
d) 9.9%
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