Question: A developer has put together a business plan to construct a retail structure with the following Pro Forma information: Adjusted Gross Income, Annual: $540,000 Estimated

A developer has put together a business plan to construct a retail structure with the following Pro Forma information:

Adjusted Gross Income, Annual: $540,000

Estimated Expenses, Annual: $172,000

Planned Rate of Return: 13%

The developer is looking to obtain a long-term loan from a bank to cover the construction of the retail structure. After assessing the developers credit worthiness, the bank assigns the developer an interest rate of 8.0%. The bank will limit the loan at a ratio 75%, Loan Value to Economic Value.

Please build a spreadsheet (similar to the model on page 202) and answer the following questions:

What is the computed Cap Rate that will be used in computations of the Economic (Capitalization) Value ?

What is the Economic (Capitalization) Value of the Project ?

What is the maximum loan value the bank will be willing to lend based on all of these factors ?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

A developer has put together a business plan to construct a retail structure with the following Pro Forma information: Adjusted Gross Income, Annual: $540,000 Estimated Expenses, Annual: $172,000...

ignore the first question. Please Solve the question below it. 2) Please build a spreadsheet similar to Table 6.1 to compute the maximum overdraft for a project with the following characteristics:...

I need help solving this lab. I tried to work on it and have solved some of it, so I want to see if its right and how to solve the rest. It connects to lab 1, 4, and 6. I hahe posted all of the...

i got 7 questions in the assignment in the PDF file on P16-17 They are all about the case story The total of the words are 1500 words without any format QUEENSLAND UNIVERSITY OF TECHNOLOGY QUT...

Which of the five CPRs should Doug Scovanner accept? Be prepared to explain how each of the considerations that follow influenced your decision: (Please Give Explanation and COMPUTATION) a.NPV and...

This is a case study for financial planing course. there is a list of 18 questions at the end, only 5 are required. whichever questions you feel most confident answering. ik the cheg limit is 3 parts...

Please review the historical performance and projections on the Home Depot Value Line page, the spreadsheet, and the pro forma balance sheet and income statement. Submit a complete thorough ANALYSIS...

The car rental business was affected by general economic conditions and more particularly by conditions in the travel industry, especially airline traffic. There was a high correlation between...

Bidding for Hertz: Leveraged Buyout Overview In late summer 2005, Greg Ledford, managing director and head of automotive and transportation buyouts at the Carlyle Group, found himself examining his...

Assuming a tax rate of 35%, what is the WACC the ADR holder should use to discount Pecoms cash flows? Assume the discount rate what you calculated now. Project Pecoms free cash flows using exhibits...

Fishy Restaurant offers seafood. The specific items to prepare a dish are shown below for one of the menu items. Item Cost Scallops Vegetables Salad $4.25 0.62 0.46 Spices 0.06 Oil 0.01 Sauce 0.01...

Anne Jeng Inc.'s accounts show the following balances: Cost of goods sold Insurance expense Advertising expense Freight-out Loss on sale of equipment Rent expense (one-half pertains sales department)...

Inventory management relies on volumes, payers mix, stock options, or patient characteristic metrics

Draw a class diagram and its relationship based on the following statements. You can use any UML tool/software to represent your class diagram. Do NOT copy and paste your diagram, use the attachment...