Question: Please help answer question 25. You are considering the purchase of an office building for $1,500,000. Your projections are these: First year potential gross income

 Please help answer question 25. You are considering the purchase of

Please help answer question

an office building for $1,500,000. Your projections are these: First year potentialgross income is $340,000 ' Vacancy and collection losses are 10% of

25. You are considering the purchase of an office building for $1,500,000. Your projections are these: First year potential gross income is $340,000 ' Vacancy and collection losses are 10% of potential gross income ' Operating expenses equal 40% of effective gross income Capital expenses equal 5% of effective gross income (\"above-the-line\") You have arranged a $900,000 ten-year first mortgage loan, with an annual interest rate of 5%. The principal will be partially amortized over 10 years with a monthly payment of $6,000 Total up-front financing fees will equal 2% of the loan amount. c. (5 points) Calculate the overall (\"going-in\") capitalization rate d. (5 points) Calculate the required equity investment

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!