You acquired a large multi-family property for $8M and financed 60% of the purchase price with a 5-year mortgage with a 20-year amortization period. How much did you borrow?

1 points

Question 7

What is your mortgage payment if the loan offers a 5% interest rate and payments are made on an annual basis?

1 points

Question 8

What is the associated debt coverage ratio (DCR) if NOI in the first year is 500,000?

1 points

Question 9

What is the associated debt coverage ratio (DCR) if NOI in the first year is 500,000?What is the associated debt coverage ratio (DCR) if NOI in the first year is 500,000?

1 points

Question 10

If you are in the 35% marginal tax bracket, how much is your tax liability reduced by taking the mortgage interest deduction?

1 points

Question 11

[The information presented here applies to questions 11 -- 13] You have purchased a small multi-family building in Livingston, NJ. The net present value of the cash flows from your equity in the investment is $150,000. If you provided the $600,000 equity investment necessary to acquire the building, what is the present value of the cash flows going to the equity investor?

1 points

Question 12

What is the profitability ratio associated with this investment expressed as a percent?

1 points

Question 13

What would the profitability ratio expressed as a percent be if the NPV remained the same but investment required an equity contribution of $1,000,000?

1 points

Question 14

You have a choice between two investment opportunities, A and B. 80% of the returns generated by property A are from the sale of the property at the end of the holding period. For property B, this number is 60%. Based on this information alone, investment in property B appears to be more risky.

True

False

1 points

Question 15

You have a choice between two investment opportunities, A and B. 40% of the returns generated by property A are associated with the cash flows from operations. For property B, this number is 30%. Based on this information alone, investment in property B appears to be a riskier proposition.

True

False

1 points