All information/data needed is given ... #11, 12 & 13

11. FINAL EXAM PRACTICE - SPRING 2020 Bob buys a property that costs $5,000,000. Bob will own the property for two years. The NOI from the property for years 1-3 is to the right: Bob will sell the property at the end of year 2 at a cap rate that is 50 basis points lower than Year NOI the cap rate at which he bought the property. 1 $300,000 2 $315,000 Assume Bob finances his purchase with a 50% LTV Fixed Rate 10 loan at an annual rate of 3 $330,000 *K12. 5% with annual compounding and annual payments. What is Bob's annualized IRR for the investment in question? Ann buys a property that costs $1,000,000. She finances the purchase with a 80% LTV mortgage. annual payments. She gets a 20 year interest only fixed rate mortgage at an annual interest rate of 5%, with annual compounding and Ann must pay 1.5 points upfront in mortgage closing costs (as a % of the loan amount). The loan has a 5/4/3/2/1 prepayment penalty structure (she must pay a 5% penalty if she prepays at any time in the first year, 4% penalty in the second year etc). Suppose Ann will sell the property in 3 years, after her 3rd year's mortgage payment and pay off the balance when she sells. What is Ann's annualized IRR for the loan in (2.2.a)? 13. Ann purchased a property for $1,000,000. She bought the property at a 6.00% cap rate. She finances the purchase with an Interest Only senior loan at 50% LTV at an interest rate of 4.00%. She also decides to get subordinate / mezzanine financing for 20% of the capital stack (from 50%-70% LTV) at 8.00% interest only. What is the weighted average cost of Ann's debt? 14. Which of the following is not a benefit of the Limited Liability Company (LLC) ownership structure? (A) Pass through entity for tax purposes (B) Investors only liable to the extent of their investment Double taxation (D) Management flexibility