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Bohemian Apartments can be purchased for $655,000 with initial annual NOI $60,900 that is projected to...

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Finance

Bohemian Apartments can be purchased for $655,000 with initialannual NOI $60,900 that is projected to grow 2.5% annually.Evaluation of the project must be completed using a discount rateof 9%. The loan used in the purchase shall be at 70% LTV, a 5.50%annual interest rate and a 30 year term. Closing costs shall be 3%and cost of sale 6.5%. Project the cash flows for a 5 year hold anddetermine the NPV of the project and the first year ROI.

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ACost of apartment655000BLTV70CABLoan amount458500RateInterest rate550NperNumber of years of mortgage30PvLoan amount458500PMTAnnual Repayment31547Using PMT function of excel with Rate55Nper30Pv458500Loan Balance at the    See Answer
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Bohemian Apartments can be purchased for $655,000 with initialannual NOI $60,900 that is projected to grow 2.5% annually.Evaluation of the project must be completed using a discount rateof 9%. The loan used in the purchase shall be at 70% LTV, a 5.50%annual interest rate and a 30 year term. Closing costs shall be 3%and cost of sale 6.5%. Project the cash flows for a 5 year hold anddetermine the NPV of the project and the first year ROI.

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