Legacy Development LLP will be building a small residential property. The total budget for the project, including interest, is $2,500,000. The expected cash flows for the project are as follows:

Start of quarter 1: Land acquisition $500,000

Soft costs: $100,000

Hard costs: $200,000

Start of quarter 2: Soft costs: $200,000

Hard Costs: $350,000

Start of quarter 3: Soft Costs: $200,000

Hard costs: $350,000

Start of quarter 4: Soft Costs: $200,000

Hard costs: $350,000

The lender is willing to provide a construction loan with a maximum LTC of 65% including interest. The interest rate is expected to be 6% per year throughout the development process and will be capitalized quarterly.

a) What is the construction loan balance at the end of Quarter 4? b) If the stabilized NOI at the end of Quarter 4 is $150,000 and comparable cap rates are 5%, calculate the amount the equity investors could withdraw from the project if they secure a 5-year mortgage with an interest rate of 4%, an amortization period of 25 years, a maximum LTV of 70% and a minimum DSCR of 1.25.