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use provided information, answer in Excel and provide steps, thank you. 3. Calculate the Effective Gross Income Multiplier (EGIM) 4. Calculate the Operating Expense Ratio
use provided information, answer in Excel and provide steps, thank you.
3. Calculate the Effective Gross Income Multiplier (EGIM)
4. Calculate the Operating Expense Ratio (OER)
5. Calculate the Debt Coverage Ratio (DCR)
You are considering purchasing a small office building for $1,975,000 Your expectations include: - First-year gross potential income of $340,000; - Vacancy & collection losses equal to 15% of PGI; - Operating expenses = 40% of EGI; - Capital expenditures 5% of EGI - $1,481,250 mortgage (75% LTV) @ 7% - Mortgage will be amortized over 25 years with a monthly payment of $10,469.17 - Total up-front financing costs = 2% of the loan amount - Required equity investment is $523,375 [$1,975,000- ($1,481,250 - $29,625)]Step by Step Solution
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