Question
You purchase a building that generates a stabilized NOI of $900,000 and has a capitalization rate of 8%. It has been financed with a mortgage
You purchase a building that generates a stabilized NOI of $900,000 and has a capitalization rate of 8%. It has been financed with a mortgage loan of $6,750,000 with a 5-year term, a 25-year amortization and an interest rate of 6%.
a) Calculate the Loan to Value (LTV)
b) Calculate the Debt Service Coverage (DSCR).
c) Calculate the loan balance at the end of one year.
d) If you sell the building at the end of the year for $12,000,000 what is your Return on Equity (ROE)?
Step by Step Solution
3.32 Rating (128 Votes )
There are 3 Steps involved in it
Step: 1
a Loan to Value LTV is the ratio of the mortgage loan to the property value ...
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Basic Finance An Introduction to Financial Institutions Investments and Management
Authors: Herbert B. Mayo
10th edition
1111820635, 978-1111820633
