the blank boxes in the spread sheet below (20pts) Real Estate Investment Analysi
ID: 2807036 • Letter: T
Question
the blank boxes in the spread sheet below (20pts) Real Estate Investment Analysis Asking price $1,100,000.00 0.00% 25.00% ofrets of EGI (no stops ) payments per year 30 years Assume value of property will grow at this rate Appreciation rate holding period selling costs Building value 4.00% 3 years 0,000% 80.00% 29 35.00% of sales of asking price years (All taxes) 67 00 equity annual loan pymt mortgage bal Year 3 of loan end of year payment mortgage balance Principal Before tax cash flow debt service before tax CF Page 6Explanation / Answer
Answer for box no.1:
Given total value of the property=$1,100,000
Loan to value=80%=$1,100,000*20%
Loan value=$880,000.
Therefore, equity=20%*$1,100,000
=$220,000.
Annual loan payment is arrived by using the formula PMT(rate,nper,pv,[fv],[type])
Rate=7.5%
Term=30 years.
PV=$880,000.
EMI=PMT(7.5%,30,-880000,0)
=$74,510.69.
Principal outstanding at the end of year 3=PV(rate,nper,pmt,[fv],[type])
=PV(7.5%,27,-74510.69,,0)
=$852,505.19.
Values in box 1 is loan=$880,000.
Equity=$220,000.
EMI=$74,510.69
Principal outstanding at the end of year 3=$852,505.19.
Answer for second box:
Values in the second box are as follows:
Calculations are as follows:
Answer for before tax cash flows box(box 3):
Calculation for the above table are as follows:
Answer for after tax cash flows(box 4):
End of year 1 2 3 Payment(1) 74510.69 74510.69 74510.69 Mortagage balance(2) 871489.3421 862340.3527 852505.1892 Interest (3) 66000 65361.7005 64675.52625 Principal(4)=(1)-(3) 8510.69 9148.9895 9835.16375Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.