REAL ESTATE FINANCE Sample Problems (Show detailed solution) 1. A lender has quoted an interest rate of 5.5% per annum with monthly payments. What is the interest payment in the first month for a P1,000,000 mortgage amount? Round your answer. 2. A commercial property producing an annual gross income of P390,000 was sold two months ago for P3,412,500. What is the property's gross income multiplier? 3. A 7-year old residence is currently valued at P720,000. What was the original value if it has appreciated by 60% since it was built? 4. An office building recently sold for P50,000,000. Given the following information: a) Gross (potential) income : P10,000,000. b) Vacancy factor : 8 percent. c) Expenses : 45 percent of effective gross income. d) Annual mortgage payment : P4,125,000. e) Equity : P12,500,000. What is the rule of thumb cash yield per annum? 5. A tenant has a lease that states the base rent is P5,000 per month plus 3% of the sales above P50,000 in gross sales per month. The tenant's sales last year were P850,000. How much rent was paid last year? 6. A building is leased for Php 1,000,000 annually and its operating cost ratio is 20%. What is the value of this building if the gross income multiplier is 12? 7. Vacant land was bought for P10M and it has earned P 1M every year on a ground lease. What is cap rate? 8. An investor who has investments in bonds earning 4% is offered a property. which earns rental P1.OM yearly. In addition to risk-free interest, he also wants to recover investment within 10 years. What is the highest price he can agree to