QUESTION 1 Fill in the blanks. You must show your brief calculations. Total acquisition price 750,000 Property consist of nine office suites, four on first floor and five on the second floor. Contract rent: six suites at $1,800 per month and three at $1,400 per month Vacancy and collection losses: 10% per year operating expenses: 40% of effective gross income each year Capital expenditure: 5% of effective gross income each year Assume $750,000 acquisition price is to be financed with 30-year, 7% mortgage loan. The loan amount is 75% of the purchase price. Total up-front cost will be 3% of the loan. Equity required at property acquisition Cash flows from annual operation Potential gross income (PGI) Vacancy and collection loss IVC) Effective gross income (EGI) operating expenses (OE) Capital expenses (CAPX) Net operating income (NOI) Debt service (DS) Before-tax cash flow (BTCF) Tax liability Tax) After-tax cash flow (ATCF) Ratios Capitalization rate NOI/(ACQUISITION PRICE) Equity dividend rate. BTCF/(EQUITY INVESTMENT) Effective gross income multiplier EGIM (ACQUISITION PRICE)/EGI operating expenses ratio oER OE/EGI Loan-to-value ratio LTV- MORTGAGE BALANCE/PROPERTY VALUE Debt coverage ratio DCR NOI/ (DEBT SERVICE)