You purchase a building that generates a stabilized NOI of $900,000 and has a capitalization rate of

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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)?

Related Book For answer-question

Basic Finance An Introduction to Financial Institutions Investments and Management

ISBN: 978-1111820633

10th edition

Authors: Herbert B. Mayo

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Posted Date: Apr 14, 2023 12:53 AM

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You purchase a building that generates a stabilized NOI of $900,000 and has a capitalization rate of

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a Loan to Value LTV is the ratio of the mortgage loan to the property value ... View the full answer

Basic Finance An Introduction to Financial Institutions Investments and Management

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