urgent

6. PrimeRates, a Calgary based venture capital company, has recently negotiated a deal with Phil Gates, a software developer. With the help of PrimeRates, Phil was able to purchase an office/industrial building in a Calgary suburb for a total cost of $4,500,000, which included $500,000 in closing costs. Phil financed the purchase of the building with a $1,125,000 down payment, and a shared appreciation mortgage from PrimeRates for the remainder of the funds. The loan is written at an interest rate of 8% per annum, compounded semi-annually, calling for quarterly payments rounded up the next higher dollar, a 20-year amortization, and a 5-year term. As well, the lender will receive 5% of the building's net operating income quarterly during the entire loan term, and 1% of any appreciation in the building's market value at the end of the term. Calculate the effective annual rate that the lender will earn during the 5-year period assuming that the building's net operating income in the first 5 years remains constant at $225.000 per annum, and the market value of the building appreciates at 2.25% per annum, from its $4.000.000 market value at purchase. [7 MARKS] 6. PrimeRates, a Calgary based venture capital company, has recently negotiated a deal with Phil Gates, a software developer. With the help of PrimeRates, Phil was able to purchase an office/industrial building in a Calgary suburb for a total cost of $4,500,000, which included $500,000 in closing costs. Phil financed the purchase of the building with a $1,125,000 down payment, and a shared appreciation mortgage from PrimeRates for the remainder of the funds. The loan is written at an interest rate of 8% per annum, compounded semi-annually, calling for quarterly payments rounded up the next higher dollar, a 20-year amortization, and a 5-year term. As well, the lender will receive 5% of the building's net operating income quarterly during the entire loan term, and 1% of any appreciation in the building's market value at the end of the term. Calculate the effective annual rate that the lender will earn during the 5-year period assuming that the building's net operating income in the first 5 years remains constant at $225.000 per annum, and the market value of the building appreciates at 2.25% per annum, from its $4.000.000 market value at purchase. [7 MARKS]