Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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)

image text in transcribed

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

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Jeff Madura

5th edition

132994348, 978-0132994347

More Books

Students also viewed these Finance questions

Question

=+How might you explain this phenomenon?

Answered: 1 week ago