Question: aluation Analysis Problem - Enter all answers on this page and attach your cash flow Underwriting information: 300 unit apartment building 1,500 per month average

aluation Analysis Problem - Enter all answers on this page and attach your cash flow

Underwriting information:

300 unit apartment building

1,500 per month average rent

7% vacancy

38% total operating expense ratio

Replacement Reserves of $250 per unit per year

3% growth rate

Purchase price is $50 million

Exit cap rate is 6.5%

Sales costs are 2%

Unlevered discount rate is 7%

Assume 5 year holding period.

Part 1 - Prepare 5 year pro forma operating statement

What is cap rate on the purchase price?

Determine the sales price at the end of year 5

Based on your analysis, what do you think the initial value of the asset is?

If you buy the asset for $50 million, what is your NPV?IRR?

Part 2 - Assume the above but now with the following loan information:

Loan principal of $30 million

5% interest rate

30 year term with amortization

2% loan fees

Calculate levered cash flows

Calculate net sales proceeds after debt repayment

What are net loan proceeds?

What is monthly loan payment?

What is effective annual interest rate (effective borrowing cost)?

What is your required equity investment if you buy the asset for $50 million?

What is your equity dividend rate?

What is the DSCR?

If the required return (discount rate) increases to 10%, what is your NPV?Levered IRR?

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!

Valuation Analysis Problem Enter all answers on this page and attach your cash flow Underwriting information: 200 unit apartment building 1,000 per month average rent 8% vacancy 38% total operating...

Original Info Underwriting information: 300 unit apartment building 1,500 per month average rent 7% vacancy 38% total operating expense ratio Replacement Reserves of $250 per unit per year 3% growth...

Underwriting information: 3 0 0 unit apartment building 1 , 5 0 0 per month average rent 7 % vacancy 3 8 % total operating expense ratio Replacement Reserves of $ 2 5 0 per unit per year 3 % growth...

Underwriting information: 200 unit apartment building 1,000 per month average rent 8% vacancy 38% total operating expense ratio Replacement Reserves of $250 per unit per year 3% growth rate Purchase...

I need the following Answered. E3-3B E3-5B E3-8B E3-14B P3-8B P3-11B c03BExercises.qxd 12/7/12 10:30 AM Page 1 B EXERCISES 4 E3-1B (Transaction AnalysisService Company) Brown is a licensed CPA....

Please help with assignment 2 MAC2601. assignment attched MAC2601/103/1/2016 Tutorial letter 103/1/2016 Principles of Management Accounting MAC2601 Semester 1 Department of Management Accounting...

INTRODUCTION You are evaluating an opportunity to purchase a 4-unit apartment building located in central Bozeman as an investment property. The proposed purchase price is $795,000. Each of the four...

FAA APARTMENT LEASE CONTRACT NAA NATIONAL APARTMENT ASSOCIATION Date of Lease Contract: (when the Lease Contract is filled out) This is a binding document. Read carefully before signing. Moving In -...

It has been suggested that not all accounting choices are made by management in the best interest of fair and consistent financial reporting. Required: What motivations can you think of for...

Use specifically Desmos Graphing Calculator online and either embed screenshots or a link to the graph itself, that is what my assignment requires. f [(x)=451-38+3240021 marginal cost 2 (3) 4...

You take out a personal loan from the bank for $ 1 5 , 0 0 0 to pay for unexpected roof repairs. The bank requires repayment in equal monthly installments over a period of 3 years at a fixed APR of 7...

5. You put $7,500 into a bank account that has a very high continuously compounded interest rate of 18%. Assuming that no money is withdrawn, how many years will you have to wait before you have...