Potential Investment

Purchase price: $390,000

Mortgage Amount: 80% LTV, 30 year fixed at 6% PAID ANNUALLY.

Loan Origination expenses: 4% of total loan amount.

NOI: $50,000 / Year

Required return on investment (levered): 12%

Expected price appreciation: 5% per year

Selling Expenses: 3%

Expected holding period: 2 Years

What is the levered cash flow at time 0?

What is the levered cash flow at time 1?

What is the before tax equity reversion (BTER)?

What is the total levered cash flow for time 2?

What is the levered IRR?