1. Ann wants to buy an office building which costs $1,000,000. She obtains a 30 year fully amortizing fixed rate mortgage with 80% LTV, an annual interest rate of 4%, with monthly compounding and monthly payments. How much is Ann s monthly payment?
2. Ann wants to buy an office building which costs $1,000,000. She obtains a 30 year fully amortizing fixed rate mortgage with 80% LTV, an annual interest rate of 4%, with monthly compounding and monthly payments. Ann has a balloon payment due 5 years after she gets the loan. If Ann pays the required monthly payment for 5 years, how much is her balloon payment?
3. Ann wants to buy an office building which costs $2,000,000. She obtains a 30 year Interest Only fixed rate mortgage with 80% LTV, an annual interest rate of 5%, with monthly compounding and monthly payments. How much is Ann s monthly payment?
4. Ann wants to buy an office building which costs $1,000,000. She obtains a 30 year partially amortizing fixed rate mortgage with 100% LTV, an annual interest rate of 7%, with monthly compounding and monthly payments. The payment on the loan is $6,000 per month. Ann has a balloon payment due 5 years after she gets the loan. If Ann pays the required monthly payment for 5 years, how much is her balloon payment?"
5. Ann wants to buy an office building which costs $1,000,000. She obtains a 30 year fully amortizing fixed rate mortgage with 80% LTV, an annual interest rate of 4%, with monthly compounding and monthly payments. The mortgage has a 2% prepayment penalty if the borrower prepays in the first 5 years. Suppose Ann makes the required monthly payment for 3 years and prepays after her final monthly payment at the end of 3 years. What is the annualized IRR on Ann s mortgage?
6. In which lease type is the tenant responsible for rent, property taxes and insurance?
7. Tom owns an office building with 10,000 square feet of office space. Annual rent is $60 per square foot. The building currently has 88% occupancy (ie 12% vacancy). If the operating expenses are 30% of Effective Gross Income, what is the Net Operating Income (NOI)?
8. Ann wants to buy a building. The annual NOI for the building will be $175,000. She wants to get a 20 year interest only fixed rate mortgage at an annual rate of 8.35% with annual compounding and annual payments to buy the building. The lender has a minimum Debt Service Coverage Ratio (DSCR) of 1.20. What is the largest annual loan payment the lender will allow Ann to make based on the DSCR?
9. Ann wants to buy a building. The asking price is $7,500,000. Her lender has a maximum LTV requirement of 85%. What is the minimum down payment Ann needs to make in order to get this loan?
10. Ann wants to buy a building. The annual NOI for the building will be $165,000. She wants to get a 20 year interest only fixed rate mortgage at an annual rate of 7.35% with annual compounding and annual payments to buy the building. The lender has a minimum Debt Service Coverage Ratio (DSCR) of 1.25. The lender also has a maximum LTV requirement of 70%. The asking price is $3,000,000. What is the largest mortgage the lender will give Ann based on both the DSCR and LTV requirements?
11. Bob wants to buy a building. He computes the annual NOI for the following year to be $275,000. The seller s asking price for the building is $5,000,000. Bob finds a similar building nearby which sold for $6,000,000 last year and had an NOI of $360,000. If Bob thinks the building he wants to buy should sell at the same cap rate as the similar building, how much should Bob offer?
12. The Federal Reserve had a meeting where they announced plans to lower interest rates. Suppose NOIs, and expected growth rates for NOIs on properties are expected to remain the same. Using your knowledge of cap rates, what does this imply will happen to property prices? (Hint: how are cap rates related to r and g
13. You observe that the cap rate for Central Business District (CBD) office buildings in Seattle is 4.25%. The return on these buildings is 8.25%. What does this information imply is the expected NOI growth rate for these properties?
     
14. Ann wants to buy a property which costs $3,500,000. She gets a mortgage with 75% LTV. What is Ann s Asset to Equity ratio for this purchase?
15. Ann wants to buy a building. The annual NOI for the building will be $100,000. She wants to get a 10 year interest only fixed rate mortgage at an annual rate of 5% with annual compounding and annual payments to buy the building. The lender has a minimum Debt Service Coverage Ratio (DSCR) of 1.20. If Ann gets a 50% LTV loan for $500,000, what is her DSCR?
16. You observe a REIT which currently pays a dividend per share of $3.00. You expect dividends to grow 3.5% and believe the required return for this stock should be 8.75%. Using the Gordon Growth Model, what should be the price per share?
17. Ann buys a property that costs $1,000,000. She finances the purchase with a 70% LTV mortgage. She gets a 20 year interest only fixed rate mortgage at an annual interest rate of 5%, with annual compounding and annual payments. Ann must pay 2 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. Carefully write out the NPV of Ann s mortgage as a function of a general annual discount rate i. Sample Answer: NPV(i)= -100 + (5)/(1+i)^1 + 105/(1+i)^2
18. Ann buys a property that costs $1,000,000. She finances the purchase with a 70% LTV mortgage. She gets a 20 year interest only fixed rate mortgage at an annual interest rate of 5%, with annual compounding and annual payments. Ann must pay 2 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?

Answer rating: 100% (QA)

1 Anns monthly payment is 4660 Ann is buying an office building which costs 1000000 She obtains a 30 year fully amortizing fixed rate mortgage with 80 LTV an annual interest rate of 4 with monthly com... View the full answer