Questions:

6) A client is considering purchasing a small ofce building. She asks you to tell her what you think it is worth. Your analysis of the property projects the following: You have selected a 5-year holding period N01 (years): 1) $50,000 2) $55,000 3) $63,000 4) $69,000 5) $74,000 6) $78,000 You are knowable of the market believe terminal cap rates are 9% and discount rates are 11%. What is your estimate of value for the property? 7) A strip shopping center can be purchased for $500,000 from its current owner. Your analysis of the property projects the following: You have selected a 5-year holding period N01 (years): 1) $50,000 2) $52,000 3) $54,000 4) $56,000 5) $58,000 You estimated the reversion at $575,000 What is the internal rate of return ([RR) you will receive if you buy this property? 8) A purchase money mortgage (pmm) of $450,000 was given today at 4.5% interest for 20 years (monthly). The current interest rate in the market is 7.0%. What is the cash equivalent value of this mortgage? 9) You can buy a leasehold position that will pay you $75,000 per year for the next 15 years. You are aware of the fact that the typical investor seeks a 11% yield (discount rate) on this type of investment. How much is this position worth today?l 10) Estimate an overall capitalization rate by using the mortgage-equity analysis based of the following information: Loan to Value (LTV) Ratio 75% Interest Rate -.06.5 Mortgage Term - 30 years Equity Dividend Rate .09 Mortgage Constant - .076