SHOW EXCEL ANSWERS You are advising a group of investors who are considering the purchase of a shopping center complex. They would like to finance 80 percent of the purchase price. A loan has been offered to them on the following terms: The contract interest rate is 7 percent and will be amortized with monthly payments over 25 years. The loan has a lockout provision that prevents it from being prepaid before year 5. The property is expected to cost $4.5 million. NOI is expected to be $500,000, including overages, during the first year, and to increase at the rate of 3 percent per year for the next five years. The property is expected to be sell (after expenses) for $6 million at the end of the fifth year. The improvement represents 80% of cost, and depreciation will be over 39 years. Assume a 28 percent tax for income, capital gain and depreciation reversion tax and a holding period of five years.