QUESTION 11

1. Calculate the Gross Sale Price assuming a property is sold at the end of year five if the following information is known: Year 1 NOI = $102,500, Year 6 NOI = $134,500, Going in cap rate = 9.5%, and Going out cap rate= 8.5%:

   	A.	$1,582,353
   	B.	$1,415,789
   	C.	$1,398,971
   	D.	$1,187,986

1 points

QUESTION 12

1. According to lenders, the Debt Service Coverage Ratio for a construction loan should be:

   	A.	Usually below 1 but not below .5
   	B.	Equal to 1
   	C.	Almost always above 1 and generally below 1.1 since it is the least risky type of loan provided
   	D.	Usually above 1.4 depending on how risky the market is perceived to be

1 points

QUESTION 13

1. Questions 13-30 will use the assumptions as explained below:

   Purchase $45,000,000 Office space - Max 60% LTV loan

   DSCR requirement: 1.3 - Debt Yield Ratio must be above 10%

   PGI: 15% of acquisition price. Increases at 2% a year for entire hold period

   Vacancy: 18% and decreases to 10% yr 2-5

   CAPEX: 7% for entire hold period

   OPEX: 35% of EGI

   WACC: 9.5% - Reinvestment Rate: 13%

   Mortgage Rate: 5.25% 5/1 ARM - Mortgage Term: 20 yr.

   Closing costs: 2% of L/A- Future Selling costs: 4%

   Going in Market Cap rate is 6.48. Going out CAP rate is 6.48

   5 Year Hold - Tax rate 20%

   Investor requires a Before Tax IRR of 19%

   What is the Before Tax IRR?

   	A.	18.33%
   	B.	19.46%
   	C.	17.82%
   	D.	13.76%