The $N\frac{O}{?}$ for a small income property is expected to be $$154,500$ for the first year. Flnancing will be based on a $1\mathrm{.}2$

$DCR$ applied to the first year NOI, will have a $10$ percent Interest rate, and will be amortized over $20$ years with

monthly payments. The NO$/$ will increase $6$ percent per year after the first year. The Investor expects to hold the

property for five years. The resale price is estlmated by applying a $9$ percent terminal capitalization rate to the slxth$-$

year NOI. Investors require a $11$ percent rate of return on equity $($equity yleld rate$)$ for this type of property.

Required:

a$.$ What is the present value of the equity Interest in the property?

b$.$ What is the total present value of the property $($mortgage and equity Interests$)?$

c$.$ Based on your answer to part $($b$),$ what is the implied overall capitalization rate?

Complete this question by entering your answers in the tabs below.

Required A

What is the present value of the equity interest in the property? $($Do not round intermediate calculations. Round your final

answer to the nearest dollar amount.$)$

PV of cash flow to equity