A 80 unit apartment building is for sale. It rents for 800/unit per month. Operating expenses...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A 80 unit apartment building is for sale. It rents for 800/unit per month. Operating expenses for the building are 300,000 per year and property taxes are 20,000 a year. Lisa wants to buy it and thus needs to arrange a mortgage loan of 3,500,000 at j4 = 7% amortized over 25 years with monthly payments. The banker assessed the lending value of the property to be 5,500,000. The banker requires a minimum DCR of 1.20, (a) (4 marks) Does Lisa qualify for the loan? (b) (4 marks) What is the maximum size of loan supported by the incomes of the building? (c) (1 mark) Suppose the banker only wants to lend a maximum of 80% of the lending value of the building. Given (b) and this restriction, what is the size of loan Lisa can actually get? A 80 unit apartment building is for sale. It rents for 800/unit per month. Operating expenses for the building are 300,000 per year and property taxes are 20,000 a year. Lisa wants to buy it and thus needs to arrange a mortgage loan of 3,500,000 at j4 = 7% amortized over 25 years with monthly payments. The banker assessed the lending value of the property to be 5,500,000. The banker requires a minimum DCR of 1.20, (a) (4 marks) Does Lisa qualify for the loan? (b) (4 marks) What is the maximum size of loan supported by the incomes of the building? (c) (1 mark) Suppose the banker only wants to lend a maximum of 80% of the lending value of the building. Given (b) and this restriction, what is the size of loan Lisa can actually get?
Expert Answer:
Answer rating: 100% (QA)
Lets break down Lisas situation step by step a To determine if Lisa qualifies for the loan we need to calculate the Debt Coverage Ratio DCR DCR is cal... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
Study the two Terms and Conditions statements for credit cards on the right, and then answer the following questions. a. Why would you want to avoid getting cash advances with either card? b. Why do...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
Refer to Table 15-6. Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced. What is the total profit if she operates at her...
-
A parallel-plate capacitor with plate area A = 2.0m2 and plate separation d = 3.0mm is connected to a 35-V battery (Fig. 17-51a). (a) Determine the charge on the capacitor, the electric field, the...
-
You are to study the following financial statements for two furniture stores and then answer the questions which follow. Required: (a) Calculate the following ratios for each business: (i) gross...
-
At December 31, 2019, the portfolio of investments in equity securities measured at FV-NI held by Athletes Inc. is as follows. Investment Security Badger Common Stock (1,000 shares) Spartan Common...
-
Presented below are the financial statements of Rajesh Company. Additional data:1. Dividends declared and paid were $25,000.2. During the year equipment was sold for $8,500 cash. This equipment cost...
-
Garden Sales, Incorporated, sells garden supplies. Management isplanning its cash needs for the second quarter. The company usuallyhas to borrow money during this quarter to support peak sales ofla 2...
-
The Specialty Department Stores, Inc. chief executive officer (CEO) has asked you to compare the company's profit performance and financial position with the averages for the industry. The CEO has...
-
Last year Minden Company introduced a new product and sold 2 5 , 0 0 0 units of it at a price of $ 9 3 per unit. The product's variable expenses are $ 6 3 per unit and its fixed expenses are $ 8 4 0...
-
complete the following applied statistical exercises to the best of your ability after reading Chapter 2. You earn up to 4 points if it is fully complete and up to 6 points if all the answers are...
-
The functions and g are defined as follows. 6x+7 f(x)= and g(x)=x-8x 5x+3 Find(+) and g(x2). f
-
1. Consider a helical coil spring where a center position on its helix can be described by x = r coss, y =r sin s, and z=s, where x, y, and z are the Cartesian coordinates, and the independent...
-
Harris Company manufactures and sells a single product. A partially completed schedule of the company's total costs and costs per unit over the relevant range of 62,000 to 102,000 units is given...
-
Suppose company ABC has two bond issues currently outstanding. They make coupon payments annually. Based on the information in Table 2, what is the cost of debt for company ABC? Coupon Rate Time to...
-
You want to save for a new car so you make payments of $ 5 8 9 at the end of every month into the bank. When you receive your birthday present every year, you put an extra $ 1 6 0 2 into a payment on...
-
In your audit of Garza Company, you find that a physical inventory on December 31, 2012, showed merchandise with a cost of $441,000 was on hand at that date. You also discover the following items...
-
Obtain the 2013 financial statements for Canadian Natural Resources Ltd. either from the companys website or from SEDAR (www.sedar.com). Required: a. In 2013, how much in mineral exploration and...
-
Select financial information for Aaron and Jamie Ltd. appears below: The company issued 20,000 ordinary shares to a supplier in exchange for plant assets having a fair value of $200,000. The company...
-
Identify the three essential characteristics that define an asset, one of the key elements of financial statements.
-
Describe the 1040EZ, 1040A, and 1040 income tax forms.
-
Identify the factors to consider when filling out the W-4 form for your employer.
-
The following information for Great Oaks Furniture, a retail furniture and design firm, relates to Exercises 6 through 11. Perform a horizontal analysis of the balance sheets and income statements...
Study smarter with the SolutionInn App