To pay for the building, you get an interest-only 15-year loan worth $7.5 million with an...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
To pay for the building, you get an interest-only 15-year loan worth $7.5 million with an interest rate of 6.5%. 1. What is the LTV of the loan? 2. How much cash will you need for your equity investment? 3. What is the debt service for each year? 4. What is the EBTCF for each year? 5. What is the debt yield ratio in each year? 6. What is the cash-on-cash return in each year? Given this new information, you'd like to change the discount rate. (In other words, get rid of the discount rate you used previously.) The debt investors expect to earn the interest rate on their loan. You expect to earn 300 basis points more than that. 7. Using the WACC formula, what is the project's required return? 8. What is the project's NPV? 9. What is the project's IRR? 10. What is your NPV from an equity perspective? 11. What is your IRR from an equity perspective? To pay for the building, you get an interest-only 15-year loan worth $7.5 million with an interest rate of 6.5%. 1. What is the LTV of the loan? 2. How much cash will you need for your equity investment? 3. What is the debt service for each year? 4. What is the EBTCF for each year? 5. What is the debt yield ratio in each year? 6. What is the cash-on-cash return in each year? Given this new information, you'd like to change the discount rate. (In other words, get rid of the discount rate you used previously.) The debt investors expect to earn the interest rate on their loan. You expect to earn 300 basis points more than that. 7. Using the WACC formula, what is the project's required return? 8. What is the project's NPV? 9. What is the project's IRR? 10. What is your NPV from an equity perspective? 11. What is your IRR from an equity perspective?
Expert Answer:
Answer rating: 100% (QA)
step by step and calculate the values based on the given information LoantoValue LTV ratio Loan amount 7500000 Purchase price 10120000 LTV Loan amount Purchase price x 100 LTV 7500000 10120000 x 100 L... View the full answer
Related Book For
Financial Management for Public Health and Not for Profit Organizations
ISBN: 978-0132805667
4th edition
Authors: Steven A. Finkler, Thad Calabrese
Posted Date:
Students also viewed these finance questions
-
Last Sale Net Bid Ask Open Int Puts Last Sale Net bid Ask Vol Open Int 16Aug 155.00(1619H155-E) 6.45 0.75 6.95 7.25 9 16Aug 155.00(1619T155-E) 1.18 (0.75) 1.17 1.25 61 4505 16Aug 166.00(1619H160-E)...
-
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...
-
Aoslia is a small country that takes the world price of corn as given. Its domestic supply and demand for corn are given by the following: a. Assume initially that Aoslia does not open to trade. What...
-
Plot the attainable portfolios for a correlation of 0.35. Now plot the attainable portfolios for correlations of +1.0 and 1.0.
-
The rate of heat transfer to water flowing in a pipe was analyzed in Prob. 727. Let us approach that same problem, but now with dimensional analysis. Cold water enters a pipe, where it is heated by...
-
The rigid block has a weight of 80 kip and is to be supported by posts A and B, which are made of A-36 steel, and the post C, which is made of C83400 red brass. If all the posts have the same...
-
Wolsey Industries Inc. expects to maintain the same inventories at the end of 20Y3 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to...
-
A 7400 kg rocket blasts off vertically from the launch pad with a constant upward acceleration of 2.20 m/s2 and feels no appreciable air resistance. When it has reached a height of 600 m , its...
-
Continuing Payroll Project: Prevosti Farms and Sugarhouse - EERF (Static) Prevosti Farms and Sugarhouse pays its employees according to their job classification. The following employees make up...
-
Assume a market price is set artificially low. In other words, the price is set below the equilibrium price. How will this affect the market
-
Mr. Arben is a very famous comedian in Europe. He is hired to fly all the way to Canton, Michigan by Professor's Watts to perform at her birthday party. He calls a week before and says, "I am...
-
Suppose that the U.S. Federal Reserve wishes to influence the value of the dollar to decrease inflation. If the Fed uses direct intervention to achieve this goal, it will seek to strengthen/weaken...
-
Confronting Intercultural Difficulties. How might you deal with any one or two of the following obstacles to intercultural communication? If you have the opportunity, share your responses with others...
-
A 115 kg hockey player, Adam, is skating east when he tackles a stationary 133 kg player, Bob. Afterward, they move at 1.35 m/s east. What was Adam's velocity before the collision.
-
1. Macie places Q1= 90C at the origin, Q2 = 50C at 40 cm from origin in positive x-direction and Q3 = -80C at 80 cm from origin in positive x direction. Find the force on Q2 due to the other two...
-
What was the corporate tax rate? This should be an item in the notes to the financial statement. Required disclosure usually explains the federal statutory rate and a reconciliation to the actual tax...
-
Listed below are common types of current liabilities, contingencies, and commitments: a. Accounts payable b. Bank loans and commercial paper c. Notes payable d. Dividends payable e. Sales and excise...
-
What are marginal costs?
-
Millbridge Township provides a variety of summer recreation alternatives. You can belong to the town pool, play tennis, or play golf. Summer passes allowing residents to use these facilities are sold...
-
The City Transit Authority (CTA) is trying to decide between railcars manufactured by French Corp and Japan Rail Car. The French Corp cars cost more to buy initially, but they are expected to last...
-
Figure 4 shows a scatterplot for the variables life expectancy and infant mortality in 16 countries. What type of correlation does it show? Does this correlation make sense? Does it imply causality?...
-
Figure 5 shows a scatterplot for the variables number of farms and mean farm size in the United States. Each dot represents data from a single year between 1950 and 2000; on this diagram, the earlier...
-
The scatterplots in Figure 6 show two weeks of data comparing the actual high temperature for the day with the same-day forecast (part a) and the three-day forecast (part b). Estimate the correlation...
Study smarter with the SolutionInn App