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please answer soon! You are considering investing in a project that requires an up front investment of $2,300,000 and is expected to produce NOI for
please answer soon!
You are considering investing in a project that requires an up front investment of $2,300,000 and is expected to produce NOI for the four year holding period as follows: Year 1: $132,000, Year 2: $146,000, Year 3: $161,000, Year 4: $205,000. Also, at the end of the fourth year, the property can be sold for $2,500,000. Selling expenses will be 6 percent You plan to finance 75 percent of the up-front investment with a 20 year loan at 4.5 percent interest with monthly payments. Up-front financing costs will be 4 percent of the loan amount. a) What is the loan amount? b) What is the annual debt service on the loan (monthly payment x 12)? What is the levered required initial equity investment? d) Calculate the before-tax cash flow (BTCF) for years 1-4. e) After four years, the balance of the loan will be $1,491,738. What is the before tax equity reversion (BTER? 1) Calculate the net present value (NPV) of the levered investment, assuming a required return on levered equity of 16% Step by Step Solution
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