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these are all parts of one question Scenario 3: You are considering acquiring an old Newspaper Building and converting it to multi-tenant office space using
these are all parts of one question
Scenario 3: You are considering acquiring an old Newspaper Building and converting it to multi-tenant office space using a fixed-rate 90% LTV loan with a 14% annual interest rate with monthly payments and compounding. To make the decision, you've constructed the proforma in excel tab "Scenario 3." Question 39 1 pts Before-tax, what is the levered cash-on-cash multiple for the Newspaper Building investment? 1.5x 1.7x 1.2x 2.0x Question 40 1 pts Imagine that you know of another property for sale, an old Magazine Building, with a similar risk profile that would get you an after-tax return on equity of 7.0%. On an after-tax equity basis, which should you buy? Magazine Building Newspaper Building Question 41 1.5 pts What is the before-tax, unlevered return on the property (BTIRRP)? 16.45% 15.41% 15.92% 14.54% Question 42 1.5 pts What is the BTIRRD, also known as effective borrowing cost (yield) on the loan? Note: You can use either monthly or annual cash flows. You will be given credit for both. Also, Canvas can't handle "%" signs. If your answer is 10.02%, just type 10.02. Question 43 1 pts Is the overall leverage positive, negative, or neutral? negative neutral positive Imagine that your lender had originally offered you an 80% LTV loan at 11% interest, but, instead, you chose the 90% LTV loan at 14% interest On a before-tax basis, is the incremental leverage on the additional 10% LTV positive, negative, or neutral? negative positive neutral D Question 45 2 pts In going from the 80% LTV loan at 11% interest to the 90% LTV loan at 14% interest, what is the effective cost of borrowing the incremental funds? Note: To solve, you can use either the annual or monthly loan payment. You will be given credit for both. Canvas can't handle %* signs, if your answer is 10.02%, just enter 10.02 Step by Step Solution
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