This is one continuous problem with 10 questions and an extra credit opportunity. The extra credit should be submitted as an excel spreadsheet showing all of your work, by 9AM tomorrow morning. Label it: YOUR LAST NAME space Your First Initial space QUIZ ONE EC. Improper labels will be rejected.

You purchased a property for $1,000,000. Twenty percent of the purchase price represents land. The depreciable life of the asset is 40 years.

The cap rate at purchase was 5%. NOI increases 10% per year. The cap rate at sale in five years is 4%.

Fifty percent of the purchase price is debt. The debt has an interest rate of 4% per annum and you must repay $25,000 in principal at the end of each year.

Questions

1. How much mortgage is recorded at the time of purchase?
   1. 400,000
   2. 500,000
   3. 550,000
   4. 600,000
2. What is your mortgage balance at the time of sale?
   1. 375,000
   2. 475,000
   3. 500,000
   4. 625,000