Question
You purchase a building that generates a stabilized NOI of $900,000 and has a capitalization rate of 8%. It has been financed with a mortgage
You purchase a building that generates a stabilized NOI of $900,000 and has a capitalization rate of 8%. It has been financed with a mortgage loan of $6,750,000 with a 5-year term, a 25-year amortization and an interest rate of 6%.
a) Calculate the Loan to Value (LTV)
b) Calculate the Debt Service Coverage (DSCR).
c) Calculate the loan balance at the end of one year.
d) If you sell the building at the end of the year for $12,000,000 what is your Return on Equity (ROE)?
Step by Step Solution
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Step: 1
a Loan to Value LTV is the ratio of the mortgage loan to the property value ...
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Basic Finance An Introduction to Financial Institutions Investments and Management
Authors: Herbert B. Mayo
10th edition
1111820635, 978-1111820633
