The Lexington Building has the following income and expense figures: Initial Investment = $1,815,000 Gross Potential...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The Lexington Building has the following income and expense figures: Initial Investment = $1,815,000 Gross Potential Income = $1,436,000 Operating Expenses = $332,000 Net Operating Income = $960,000 Annual Debt Service = $450,000 Loan Amount = $4,785,000 Property Value = $6,600,000 1. What is the LTV% for the Lexington Building? 2. What is the DCR for the Lexington Building? 3. How risky would you consider this loan? 4. If allowable LTV is 85%, how much can be borrowed? 5. If the minimum DCR required is 1.25, how much debt service can be supported? Initial Investment = $1,815,000 Gross Potential Income = $1,436,000 Operating Expenses = $332,000 Net Operating Income = $960,000 Annual Debt Service = $450,000 Loan Amount = $4,785,000 Property Value = $6,600,000 1. What is the minimum break-even point for this property? 2. If the owner's required rate of return were 8%, what would be the investor's break-even point for this property? 3. If the owner's required rate of return were 10%, what would be the investor's break-even point for this property? The Lexington Building has the following income and expense figures: Initial Investment = $1,815,000 Gross Potential Income = $1,436,000 Operating Expenses = $332,000 Net Operating Income = $960,000 Annual Debt Service = $450,000 Loan Amount = $4,785,000 Property Value = $6,600,000 1. What is the LTV% for the Lexington Building? 2. What is the DCR for the Lexington Building? 3. How risky would you consider this loan? 4. If allowable LTV is 85%, how much can be borrowed? 5. If the minimum DCR required is 1.25, how much debt service can be supported? Initial Investment = $1,815,000 Gross Potential Income = $1,436,000 Operating Expenses = $332,000 Net Operating Income = $960,000 Annual Debt Service = $450,000 Loan Amount = $4,785,000 Property Value = $6,600,000 1. What is the minimum break-even point for this property? 2. If the owner's required rate of return were 8%, what would be the investor's break-even point for this property? 3. If the owner's required rate of return were 10%, what would be the investor's break-even point for this property?
Expert Answer:
Answer rating: 100% (QA)
The LoantoValue LTV ratio for the Lexington Building can be calculated as LTV Loan Amount Property Value x 100 LTV 4785000 6600000 x 100 LTV 7250 The ... View the full answer
Related Book For
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th Edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
Posted Date:
Students also viewed these accounting questions
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Jen and Berry's sells ice-creams from its factory-shop in Petone. There is a managing director (Maynard Dibble), a marketing manager (Mary Salman) and a production manager (Peter Pritchard). Maynard...
-
A bank reconciliation takes time and must balance. An employee was struggling in balancing the bank reconciliation. Her supervisor told her to plug (make an unsupported entry for) the difference,...
-
From the following trial balance of Hills Cleaners (Figure), prepare the following: 1. Income statement 2. Statement of owners equity 3. Balancesheet HILL'S CLEANERS TRIAL BALANCE MAY 31, 201X Dr. Cr...
-
According to the Trading Economics website, the average corporate tax rate for businesses is 23.54 percent. Asia has the lowest regional average at 19.62 percent and Africa the highest at 27.97...
-
To test whether all sales transactions have been recorded, an auditor should test a sample drawn from an entity's file of: a. Receiving reports. b. Bills of lading. c. Sales orders. d. Sales...
-
Finney Inc. has conducted an analysis of overhead costs related to one of its product lines using a traditional costing system (volume-based) and an activity-based costing system. Here are its...
-
There is a bad instruction address in this code, where is it in the following code: #Pablo Panchig .data .align 0 prompt_msg: .asciiz "Demonstrate ascii to integer " input_prompt: .asciiz "Enter a...
-
On August 1, 2016, Stephanie Ram, a sole proprietor, started a new business, Ram Wholesale Company. The company sells refrigerators (merchandise) to various retail stores and uses the periodic...
-
One of the main reasons that Melmotte is seeking additional investment is that it would like to expand overseas in the next few years. Identify ONE GLOBAL institution that has been established to...
-
Should the whole team have decided on the team members schedule accommodations collectively? Why or why not?
-
What are some of the limitations of classifying aggressive acts with a hostile-instrumental dichotomy?
-
Do you think the group should have fractured as it did? Why or why not?
-
What is meant by bystander apathy, and under what circumstances is it most likely to occur?
-
Thomas and Joyce Williams live in San Francisco, Californiaa community property state. They consider themselves native San Franciscans, having lived their entire lives in the city. This is a second...
-
When creating a brand plan we evaluate/review 5 key areas. These are known as the 5Ps. What are they?
-
Why is a help desk and production support critical to system implementations? Discuss its interrelationship with the problem management and reporting system.
-
Texas Corporation disassembles old automobiles for the purpose of reselling their components (i.e., different types of metals, plastics, rubber, and other materials). Texas sells some of the items...
-
Wendy, Xenia, and Yancy own 40%, 8%, and 52%, respectively, of the WXY Partnership. For each of the following independent situations occurring in the current year, determine whether the WXY...
-
One of your wealthy clients, Cecile, invests $100,000 for sole ownership of an electing S corporations stock. The corporation is in the process of developing a new food product. Cecile anticipates...
-
If the 3-in.-diameter short rod is made from brittle material having an ultimate strength of \(\sigma_{\text {ult }}=60 \mathrm{ksi}\), for both tension and compression, determine if the shaft fails...
-
If the 3-in.-diameter shaft is made from cast iron having tensile and compressive ultimate strengths of \(\left(\sigma_{\mathrm{ult}} ight)_{t}=40 \mathrm{ksi}\), and \(\left(\sigma_{\mathrm{ult}}...
-
The shaft consists of a solid segment \(A B\) and a hollow segment \(B C\), which are rigidly joined by the coupling at \(B\). If the shaft is made from A-36 steel, determine the maximum torque \(T\)...
Study smarter with the SolutionInn App