Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. ace development company is trying to structure a l

Ace Development Company is trying to structure a loan with the First National Bank. Ace...

70.2K

Verified Solution

Question

Finance

Ace Development Company is trying to structure a loan with the First National Bank. Ace would like to purchase a property for $4.25 million. The property is projected to produce a furst year NOI of $185,000. The lender will allow only up to 80% loan on the property and requires a DCR in the first year of at least 1.25. All loan payments are to be made monthly but will increase by 3.5 % at the beginning of each year for 5 years. The contract rate of interest on the loan is 5.5%. The lender is willing to allow the loan to negative amortize; However, the loan will mature at the end of the 5 year period.

Required:

A) What will the balloon payment be at the end of the 5th year?

B) If the property value does not change, what will the loan-to-value ratio be at the end of the 5th year period?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Chemistry
1.2K views

What is the only possible value of mâ„“ for an electron in an s orbital?Express your...

Chemistry
1.2K views

A reaction has a rate constant of 1.23 x 10 ^-2 /s at 400 K and .688/s...

Electrical Engineering
1.2K views

theme: laplace specify multiple applications in real life

Basic Math
1.2K views

****Return to problem 5.3.2 and answer the questions posed, using the t distribution rather than the...

Physics
1.2K views

Cheryl (mass= 50 kg) and Jared (mass = 62 kg) occupy separate 36-kg bumper cars....

Calculus
1.2K views

Individual pathways PRACTER 1 4 0 11 14 MOLDATE 2 5 6 6 12 15...

Accounting
1.2K views

option d= 15,266 Inventory records for Marvin Company revealed the following:...

Accounting
1.2K views

Identify four risks associated with IT systems in accounting. For each of the four risks,...

Finance
1.2K views

Right click on image and open image in new tab if text is too blurry....

Accounting
1.2K views

equired information Problem 20-1A Production cost flow and measurement; journal entries LO P1, P2, P3,...

Finance
1.2K views

View Policies Current Attempt in Progress Which of the following does NOT describe a cause...

Finance
1.2K views

8. The owner has decided to sell a new line of golf balls that are...