The Big Boy: Goldie works hard in school, goes to Penn State, studies hard for her RM$450$

midterms, and lands a big job in NYC$.$ Her first day she reports to the boss$$ office and she tells

her about a project they are working on and that Goldie is in charge of putting the deal

together. These are the details:

a$.$ They are looking at purchasing a $262-$unit apartment building in McKinney, TX for

$$78,600,000.$ The unit breakdown is as follows:

$1$ bed $$1,450\mathrm{.}0038$

$$1,800\mathrm{.}0047$

$$2,100\mathrm{.}0061$

$2$ bed $$1,900\mathrm{.}0019$

$$2,050\mathrm{.}0030$

$$2,200\mathrm{.}0039$

$$2,600\mathrm{.}0028$

In addition to rent, the apartment building collects an average of $$80$ per unit per

month in parking, utility, and maintenance fees on top of rent. The growth rate has

been estimated to be $4\%$ per year moving forward.

b$.$ This is in a great area of Dallas where there has not been any shortage of demand for

high quality, newly constructed apartments. Pre$-$leasing already has this building $96\%$

occupied. Because it is brand new, operating expenses are low at only $30\%$ thanks to

high quality building materials. Capital expenditures are estimated to be $5\%$ per year on

average.

c$.$ We expect to hold the property for $5$ years and sell at a $4\mathrm{.}97\%$ cap rate. It will cost us $3\%$

of the sale price to sell the property.

d$.$ After getting several quotes from different lenders, it looks like we have two options:

$1.70\%$ LTV$,6\%$ annual rate, $10-$year IO$,2\%$ origination fee, $2\%$ prepayment

penalty, paid monthly.

$2.80\%$ LTV$,5\%$ annual rate, $10-$year term partially amortized over $25$ years, $1\%$

origination fee, $3\%$ prepayment penalty, paid monthly.

e$.$ How much will we be required to use as a down payment?

f$.$ How much will we return to the lender?

g$.$ What is the sales price at the end of year $5?$

h$.$ What are the net sales proceeds?

i$.$ What is the BTER?

j$.$ What is the capital gain on sale?

k$.$ What is the levered IRR?

l$.$ What is the NPV$?$ PLEASE SHOW ALL THE FORMULAS