QUESTION # 1

You are considering the purchase of an apartment building that has 25 units that can be rented out at $1,500 per month. You have estimated operating expenses and expected vacancy and collection losses for the first year to be $55,000 and $50,000, respectively. You also have estimated that you will be able to generate an additional $7,500 in the first year from garage rentals on the property. If the expected purchase price of the property is $3,250,000 and you are planning on making a 20% down payment, calculate the debt yield ratio assuming the interest rate is 6%.

QUESTION # 2

Youhavetakenouta$375,000,7/1ARM.Theinitialrateof4.75%(annual)islockedinfor7years. Calculate the payment after recasting the loan (i.e., after the reset) assuming the interest rate after the initial lock period is 5.25%. (Note: the term on this 7/1 ARM is 30 years.)

QUESTION # 3

Given the following information, calculate the Effective Borrowing Cost (EBC). Loan amount: $175,000, Term: 30years,Interestrate:7%,Payment:$1,164.28,Discountpoints:1,Originationfee:$3,250.Assumetheloanis held until the end of year 10