Problem 2 You are an employee of University Consultants and have been given the following assignment. You are to present an investment analysis of a small retail income producing property for sale to a potential investor. The asking price for the property is $1,250,000. Rents are estimated at $160,000 during the first year and are expected to grow at 2.5% per year thereafter. Vacancies and collection losses are expected to be 10% of rents. Operating expenses will be 35% of effective gross income. What is the net operating income? A loan can be obtained for 70% of the purchase price. What is that loan amount? If that loan is priced at 8% with a 30-year amortization schedule, what is the year one principal and interest payment? What is the debt service coverage ratio? Assuming a 6% capitalization rate what is the value of the property? What is the loan to value? (Extra Credit 2 pts-what is the debt yield?) 5 Page