1)The minimum lenders typically require for a DCR is: 2) A property produces an

Question

1)The minimum lenders typically require for a DCR is:

2) A property produces an after tax internal rate of return of 12.24%. If the investor has a marginal tax rate of 31%, what is the before-tax equivalent yield?

3) A property produces an 8.92% ATIRR on the total investment considering a tax rate of 28%. What is the maximum interest rate that could be paid on debt without causing the leverage to be negative?

4) A property that produces a first year NOI of $80,000 is purchased for $750,000. The NOI is expected to increase by 15% in the sixth year when some of the leases turnover. The resale price in year 10 is expected to be $830,000. What is the net present value of the property based on the 10-year holding period and a discount rate of 9.5%?

5)

6)A REIT with 100 shares outstanding earns $1,000 in rent and incurs operating expenses of $400. In addition, the REIT owns property with an historic cost of $6,000 and depreciates it over a15 year period using straight-line depreciation. What are the funds from operations per share, and the earnings per share for this REIT?

Explanation / Answer

1) Most lenders require a 1.2-1.3 DCR

, 2) before-tax equivalent yield = 12.24 /0.69= 17.739 %

3)

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