real estate

Use this information to answer the following questions. The ABC Company (ABC) has the opportunity to purchase a $450,000 tract of land to be used for a residential subdivision. Management is interested in subdividing the land into 40 parcels. Off-site improvement costs will be $100,000. Grading of the land and street paving are estimated at $300,000, while other on-site costs will be $125,000. ABC has $175,000 in equity to be put in the project in the form of a down payment on the land. The appraised value for the completed land development is $1.4 million and a loan is available from a lending institution at a 12% interest rate. Determine the size of loan that is needed by ABC. a.$1,000,000

b. $900,000

c. $800,000

d.$700,000

e.$600,000

ABC expects to sell 10 parcels during the first year of operation, 20 parcels the second year, and the remaining 10 during the third year. If 20 lots had selling prices of $40,000 each, the other 20 were priced at $30,000 each, and the first 20 lots sold were the higher priced ones. If the lender requires a 30% premium, calculate the remaining loan balance at the end of year 2

a.$35,000

b.$25,714

c. $17,143

d. $5,712

e.$0