ANSWER NUMBER 3 ONLY PLEASE this is question 1 which ties into 3 later

to save you time: answers for question 1 THIS IS QUESTION 3

You are thinking about purchasing a small apartment building in Fair Lawn, New Jersey. The property contains 10 apartments of similar size and con-figuration that rent for $2,000 a month. Based on historic vacancy rates and some market analysis, you expect a vacancy rate of 5% per year. (a) If expenses are estimated to be 40% of effective gross income, what is the net operating income generated by the property in the first year of ownership? (b) What is the estimated value of the property if the current market cap rate is 8% ? a) \begin{tabular}{lrrr} & 10 & & \\ rate & 5% & & \\ & & & \\ rent & 20000 & 1000 & 19000 \\ expense & 40% & & \end{tabular} \begin{tabular}{|c|c|c|c|c|c|} \hline Months & Total & & Feb & ar & Apr \\ \hline gross rent i & 228000 & 19000 & 19000 & 19000 & 19000 \\ \hline expenses & -91200 & -7600 & -7600 & -7600 & -7600 \\ \hline net income & 136800 & 11400 & 11400 & 11400 & 11400 \\ \hline & Net annual income & & 136800 & & \\ \hline & b) Market Cap rate & & 8% & & \\ \hline & Market Value & & $1,710,000.00 & & \\ \hline \end{tabular} You are contemplating using your own money or borrwing 65% of this purchase from a local lender. (a) Lender is offering either recourse loan or a nonrecourse loan. Which would you choose and why? (b) Assuming the value calculated in 1 (b) above: (i) what amount could you borrow? (ii) If lender requires the Net Operating Income in 1(a)to be at a minimum the same as the debt payment on this loan, would you be able to meet this requirement if the loan amortized over 30 years at 7% Would the Net Operating Income justify the loan if it amortized over 10 years instead? (in (ii) above please show the ratio of Net Operating Income / Annual Debt Payments)