Question: Calculate a capitalization rate using the following assumptions: 8 year Loan Term 30 year mortgage schedule Equity yield rate (11% ) GRM is 6 LTV

Calculate a capitalization rate using the following assumptions: 8 year Loan Term 30 year mortgage schedule Equity yield rate (11% ) GRM is 6 LTV .80 Vacancy Rate is 5% Annual future appreciation is estimated at 1.5% Loan Interest Rate (4%) Net Operating Income $988,819 Expense Ratio 49%

o Formulas To Rate Calculation:

o 1- Loan To Value Ratio X Annual Mortgage Constant

o + 2 - Equity Ratio X Equity Yield Rate o = Base Rate

o + 3 - Loan To Value Ratio X Part Paid Off X Sinking Fun Factor

o - 4 - Allowance For Future Appreciation X Sinking Fund Factor

o = Capitalization Rate

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