***Please explain thoroughly and clearly*** I am preparing for an exam and am not to clear on where certain numbers come from. THANK YOU SO MUCH AND BEYOND!

Homework: Exam 1 Practice Problems. You must document your solution to receive credit. Hand write the computations you used to solve. Show the steps you use when using a calculator. When done, create a pdf and submit via Blackboard by the due date. Problem 1. Leases You are evaluating alternate 3 years leases. Lease A is for $20 per year with 6 months free rent. Lease B starts at 18 and increases $1 each year. (Use a 5% discount rate to analyze.) What is the present value of Lease A? What is the Effective Rent for Lease A? What is the present value for Lease B? What is the Effective rent for lease B? Problem 2. Percentage (Overage) rents A retail tenant has agreed to pay a base rent, plus 6% of the sales above $300,000. Sales are expected to grow at 4% per year. Current sales are $350,000. What are the expected sales in year 3? What is the expected overage rent to be earned in year 3? Problem 3: Evaluating a Multifamily Investment You are considering purchasing a Class B multifamily project in a midsized town in Central Texas and have received the following information about the project: (Annual Figures unless otherwise noted): Asking Price: $9,000,000 Number of Units 185 Average Rent per unit: $660 per month Current Vacancy 2% Proforma Vacancy 7% Misc Income: 2,130 (estimated for full occupancy) Property Taxes 149,325 Repairs and Maintenance 106,529 Management, Common Area Utilities, Other Expenses 300,254 CAPEX $250 per unit The property is approved for a 75% LTV loan with 2 points at 4.75% interest rate, with a 5 year term on a 25 year amortization schedule (balloon payment due at the end of year 5.) Reconstructed Operating Statement: What is the PGI for this property? What are the proforma V&C losses? What is the proforma EGI for this property? What are the operating expenses for this property? What is the CAPEX for this property? What is the NOI for this property? What is the dollar amount of the loan for this property? What is the annual Debt Service for this Property? How much Equity is needed to purchase this property? What is the BTCF for year 1 for this property? Valuation: Given the cap rate on similar projects is 8.25%, what is the value of this project? Given the EGIM on similar projects is 6.5, what is the estimated value of this project? You expect the NOI to grow at 2.5% each year. The cap rate for this project is estimated at 8.5% in 5 years. Selling expenses are estimated at 5%. What is the projected NOI for year 3? What is the projected NOI for year 6? What is the projected selling price? What is the projected net selling price? Given a discount rate of 10.25%, what is the value of this project (use DCF approach here)? Ratio Analysis: Compute the following year one ratios for this project. Cap Rate Cash on Cash Return (Equity Dividend Rate) EGIM Operating Expense Ratio Loan to value Ratio Debt Coverage Ratio Breakeven Occupancy Debt Yield Ratio Homework: Exam 1 Practice Problems. You must document your solution to receive credit. Hand write the computations you used to solve. Show the steps you use when using a calculator. When done, create a pdf and submit via Blackboard by the due date. Problem 1. Leases You are evaluating alternate 3 years leases. Lease A is for $20 per year with 6 months free rent. Lease B starts at 18 and increases $1 each year. (Use a 5% discount rate to analyze.) What is the present value of Lease A? What is the Effective Rent for Lease A? What is the present value for Lease B? What is the Effective rent for lease B? Problem 2. Percentage (Overage) rents A retail tenant has agreed to pay a base rent, plus 6% of the sales above $300,000. Sales are expected to grow at 4% per year. Current sales are $350,000. What are the expected sales in year 3? What is the expected overage rent to be earned in year 3? Problem 3: Evaluating a Multifamily Investment You are considering purchasing a Class B multifamily project in a midsized town in Central Texas and have received the following information about the project: (Annual Figures unless otherwise noted): Asking Price: $9,000,000 Number of Units 185 Average Rent per unit: $660 per month Current Vacancy 2% Proforma Vacancy 7% Misc Income: 2,130 (estimated for full occupancy) Property Taxes 149,325 Repairs and Maintenance 106,529 Management, Common Area Utilities, Other Expenses 300,254 CAPEX $250 per unit The property is approved for a 75% LTV loan with 2 points at 4.75% interest rate, with a 5 year term on a 25 year amortization schedule (balloon payment due at the end of year 5.) Reconstructed Operating Statement: What is the PGI for this property? What are the proforma V&C losses? What is the proforma EGI for this property? What are the operating expenses for this property? What is the CAPEX for this property? What is the NOI for this property? What is the dollar amount of the loan for this property? What is the annual Debt Service for this Property? How much Equity is needed to purchase this property? What is the BTCF for year 1 for this property? Valuation: Given the cap rate on similar projects is 8.25%, what is the value of this project? Given the EGIM on similar projects is 6.5, what is the estimated value of this project? You expect the NOI to grow at 2.5% each year. The cap rate for this project is estimated at 8.5% in 5 years. Selling expenses are estimated at 5%. What is the projected NOI for year 3? What is the projected NOI for year 6? What is the projected selling price? What is the projected net selling price? Given a discount rate of 10.25%, what is the value of this project (use DCF approach here)? Ratio Analysis: Compute the following year one ratios for this project. Cap Rate Cash on Cash Return (Equity Dividend Rate) EGIM Operating Expense Ratio Loan to value Ratio Debt Coverage Ratio Breakeven Occupancy Debt Yield Ratio