You are an investment analyst for diversified investment partnership, and have been given the following assignment. You are to present an investment analysis of a medium commercial income producing property for sale to a potential investor. The asking price for the property is $1,500,000; rents are estimated at $180,000 during the first year and are expected to grow at 4% per year thereafter. Vacancies and collection losses are expected to total 8% of rents. Operating expenses are forecast at 30% of effective gross income. A 75 percent loan to value can be obtained at 10% interest for a 25 year term. The property is expected to appreciate in value at 2.5% per year and is expected to be owned for five and then sold.

A. what is the investors expected before tax internal rate of return on equity invested (BTIRR)

B. What is first year debt coverage ratio

C What is terminal capitalization rate