Zenith investment company is considering the acquisition of an office property. It has done an extensive market analysis and has estimated that based on the current demand and supply conditions, the project is expected to result in cash flows remaining flat for the next three years at $1,000,000. During years 4, 5 and 6 the project's NOI is estimated to be $1, 200,000, $1, 250,000 and $1, 300,000, respectively. Beginning in year 7 and every year thereafter, NOI will tend to reflect a stable, balanced market and should grow at 3 per cent per year indefinitely. Zenith expects to hold the investment for 10 years then sell. Zenith believes that investors should earn 15 percent on this kind of investment. Prepare a schedule of the projected NOI in Excel and answer the following questions: A. If the appropriate terminal capitalization rate on year 11 net operating income is 12%, what is the value of the project today? B. Assume that Zenith approaches Aetna Life Insurance Company and obtains a commercial mortgage loan for 75% of the value derived in A. Other financing terms are: debt service coverage ratio of 1.25 times; interest rate 8.750%; loan term 10 years with annual debt service payments based on a 25-year amortization schedule. Answer the following questions: i. What size loan will Aetna provide based on its terms? ii. What is the actual debt service coverage ratio in year 1? iii. What is Zenith's equity dividend rate or cash on cash rate of return? iv. What is Zenith's "going in cap rate"? v. What is Zenith's before tax internal rate of return? vi. What is the estimated value of the property if you apply the Band of Investment method for developing the cap rate along with the direct capitalization of the property's year 1 net operating income? Zenith investment company is considering the acquisition of an office property. It has done an extensive market analysis and has estimated that based on the current demand and supply conditions, the project is expected to result in cash flows remaining flat for the next three years at $1,000,000. During years 4, 5 and 6 the project's NOI is estimated to be $1, 200,000, $1, 250,000 and $1, 300,000, respectively. Beginning in year 7 and every year thereafter, NOI will tend to reflect a stable, balanced market and should grow at 3 per cent per year indefinitely. Zenith expects to hold the investment for 10 years then sell. Zenith believes that investors should earn 15 percent on this kind of investment. Prepare a schedule of the projected NOI in Excel and answer the following questions: A. If the appropriate terminal capitalization rate on year 11 net operating income is 12%, what is the value of the project today? B. Assume that Zenith approaches Aetna Life Insurance Company and obtains a commercial mortgage loan for 75% of the value derived in A. Other financing terms are: debt service coverage ratio of 1.25 times; interest rate 8.750%; loan term 10 years with annual debt service payments based on a 25-year amortization schedule. Answer the following questions: i. What size loan will Aetna provide based on its terms? ii. What is the actual debt service coverage ratio in year 1? iii. What is Zenith's equity dividend rate or cash on cash rate of return? iv. What is Zenith's "going in cap rate"? v. What is Zenith's before tax internal rate of return? vi. What is the estimated value of the property if you apply the Band of Investment method for developing the cap rate along with the direct capitalization of the property's year 1 net operating income