Given the proforma below, solve for the answers using Excel and provide the necessary explanations. Rent...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Given the proforma below, solve for the answers using Excel and provide the necessary explanations. Rent Vacancies EGI Pro forma year2 year1 year3 year4 year5 $ 2,125,000.00 $2,210,000.00 $2,298,400.00 $2,367,352.00 $ 2,438,372.56 $ (106,250.00) $ (110,500.00) $ (114,920.00) $ (118,367.60) $ (121,918.63) $ 2,018,750.00 $2,099,500.00 $2,183,480.00 $2,248,984.40 $2,316,453.93 Operating Expense NOI $ 767,125.00 $ 797,810.00 $ 829,722.40 $ 787,144.54 $ 810,758.88 $ 1,251,625.00 $1,301,690.00 $1,353,757.60 $1,461,839.86 $ 1,505,695.06 $ 550,000.00 $ 100,000.00 $ 250,000.00 $ 50,000.00 $ 50,000.00 Cash Flow Before Financing $ 701,625.00 $1,201,690.00 $1,103,757.60 $1,411,839.86 $ 1,455,695.06 Capital Exp a. Given the purchase price of $20,860,000, what is the "going in" cap rate? b. What is the estimated value using a 7% cap rate? c. What is the compound annual growth rate of NOI over the 5 year holding period? d. If buildings similar to this building currently trade at a 6% cap rate and the building values grow at the same compound annual rate of NOI, what is the residual value of the building at the end of year 5? e. If buildings that are five years older than the subject building are trading at a 6.5% cap rate, estimate the residual value assuming future NOI grows at 3% into perpetuity. f. If you assume the residual value is $23,165,000 and you pay 3% selling commissions, what is your estimated investment value of the building using a discount rate of 10%? g. What is the compound annual return using the purchase price in question 1 and the net selling price after expenses in question 5? h. For this model, would it be a good assumption to use the direct cap approach to derive value? Why/Why not? Given the proforma below, solve for the answers using Excel and provide the necessary explanations. Rent Vacancies EGI Pro forma year2 year1 year3 year4 year5 $ 2,125,000.00 $2,210,000.00 $2,298,400.00 $2,367,352.00 $ 2,438,372.56 $ (106,250.00) $ (110,500.00) $ (114,920.00) $ (118,367.60) $ (121,918.63) $ 2,018,750.00 $2,099,500.00 $2,183,480.00 $2,248,984.40 $2,316,453.93 Operating Expense NOI $ 767,125.00 $ 797,810.00 $ 829,722.40 $ 787,144.54 $ 810,758.88 $ 1,251,625.00 $1,301,690.00 $1,353,757.60 $1,461,839.86 $ 1,505,695.06 $ 550,000.00 $ 100,000.00 $ 250,000.00 $ 50,000.00 $ 50,000.00 Cash Flow Before Financing $ 701,625.00 $1,201,690.00 $1,103,757.60 $1,411,839.86 $ 1,455,695.06 Capital Exp a. Given the purchase price of $20,860,000, what is the "going in" cap rate? b. What is the estimated value using a 7% cap rate? c. What is the compound annual growth rate of NOI over the 5 year holding period? d. If buildings similar to this building currently trade at a 6% cap rate and the building values grow at the same compound annual rate of NOI, what is the residual value of the building at the end of year 5? e. If buildings that are five years older than the subject building are trading at a 6.5% cap rate, estimate the residual value assuming future NOI grows at 3% into perpetuity. f. If you assume the residual value is $23,165,000 and you pay 3% selling commissions, what is your estimated investment value of the building using a discount rate of 10%? g. What is the compound annual return using the purchase price in question 1 and the net selling price after expenses in question 5? h. For this model, would it be a good assumption to use the direct cap approach to derive value? Why/Why not?
Expert Answer:
Answer rating: 100% (QA)
It seems like youre looking for help with a real estate finance exercise I can explain how to calculate the different parts of the question but since I cannot execute code or use Excel in this interfa... View the full answer
Related Book For
Real Estate Finance and Investments
ISBN: 978-0073377339
14th edition
Authors: William Brueggeman, Jeffrey Fisher
Posted Date:
Students also viewed these finance questions
-
Use the attached "words.txt" file to store the words along with their ranks in an AVL tree. Then provide the user the option to search for any word. If the word exists the program displays the rank...
-
You have been hired by the Regional Real Estate Company to help them analyze real estate data. One of the companys Pacific region salespeople just returned to the office with a newly designed...
-
You are the manager of an organization in America that distributes blood to hospitals in all 50 states and the District of Columbia. Arecent report indicates that nearly 50 Americans contract HIV...
-
Illinois Jones is being pulled from a snake pit with a rope that breaks if the tension in it exceeds 755 N. (a) If Illinois Jones has a mass of 70.0 kg and the snake pit is 3.40 m deep, what is the...
-
In Problems 4576, solve each exponential equation. Express irrational solutions in exact form. 22x + 2x 12 = 0
-
Cloth Cutter The lengths of cloth a machine cuts for making dresses are normally distributed, with a mean of 3 meters and a standard deviation of 0.25 meters. (a) What is the probability that a...
-
In two paragraphs, describe some techniques Ryan could use to help identify internal and external duplicates in his companys marketing database. Describe how you would build a marketing database to...
-
(b) Ganguly Ltd. was formed with an authorized capital of Rs 12,00,000 divided into 1,20,000 equity shares of Rs 10 each, to acquire the business of A and B whose balance sheet on the date of...
-
Consider a building with 3200 ft 2 of walls. Assume the ceiling is well-insulated and compute the energy loss through the walls based on the following materials, assuming an indoor temperature of 70...
-
Describe the Units of Activity depreciation method. Explain a real-life business example of an actual fixed asset being depreciated using the Units of Activity depreciation method.
-
On December 1 , 2 0 2 5 , Sheridan Company acquired new equipment in exchange for old equipment that it had acquired in 2 0 1 9 . The old equipment was purchased for $ 2 1 7 0 0 0 and had a book...
-
What is the output of the following code? void Function(int& x) int main( A int value- 12; Function(value); cout < < value; return 0;
-
wo firms share a market. If neither firm advertises, each firm makes $ 5 5 million. If a firm chooses to advertise, it will capture $ 3 3 million from its competitor provided that the competitor does...
-
Modify the following for loop into a while loop. int t=0; for (int i=1; i
-
A grinding mill in the Free State Province breaks down on average 5 times a month. What is the probability that the mill will not break down in a month?
-
write a brief explanation on BCP (business continuity planning )Plan in a Business?
-
Convert the numeral to a HinduArabic numeral. A94 12
-
What does it mean when a lender accelerates? What is meant by forbearance?
-
Ajax Investment Company is considering the purchase of land that could be developed into a class A office project. At the present time, Ajax believes that the site could support a 300,000 rentable...
-
A loan with the following terms is being made: Fixed rate, constant monthly payment. Closing date February 9th. 9% interest rate. Prepaid interest due at closing. $70,000 mortgage loan amount. $1,500...
-
Thor Industries manufactures Airstream and other recreational vehicles (RVs). In In June 2023, an article in the Wall Street Journal stated that the inventories of RVs held by Thor dealers had risen...
-
An article in the New York Times in early 2009 stated that even though The the U.S. economy was in a recession, and movie ticket sales had increased by 17.5 percent. In contrast, during 2020, ticket...
-
An article on barrons.com observed that the U.S. dollar has been droppingand thats good news for the stock market and companies that get a large chunk of their sales from overseas. a. What does the...
Study smarter with the SolutionInn App