You have been hired to underwrite the financing of a recently acquired apartment building. The building has thirty 2-bedroom units that are currently rented for $12,000 per year, you anticipate an annual vacancy rate of 10%, operating expenses of 20% of effective gross income, and $15,000 per year in capital expenditures (which do not increase). PGI is expected to increase at 3% per year. The owner is anticipated to hold the building for 5 years, incur sale expenses of 5% at that time, and has a current opportunity cost of 10%. The current cap rate is 6.5%, which is anticipated to increase to 7% when the property is sold. Use excel to answer the following questions (these would most likely be broken apart into different question on the exam).

a. What is the 1st 5th year NOI estimates?

b. What do you anticipate will be the net sale proceeds of the building at the end of 5 years?

c. What is your estimated value of the property today (ie, t = 0) using the direct capitalization and discounted cash flow approaches to value? Assume market discount rate of 10% for DCF method.

d. What is the unlevered Cash-on-Cash, IRR, and MIRR if the property available to be purchased for $3.5 million today. Assume the owner has an opportunity cost of equity of 10% and can finance negative cash flows at 8%.

e. What is the annual debt-service, DCR, DYR, and levered IRR associated with a $2.3m 5- year interest-only fixed rate mortgage loan offered 6% with no origination fees?

*I am stuck on C,D,E