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Question 1: You are putting together a deal to fund the acquisition of a medium-sized...

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Accounting

Question 1:

You are putting together a deal to fund the acquisition of a medium-sized multi-family property in Hoboken and need an additional $500,000 to close on the property. You propose a deal to form a joint venture where you will provide 5% of the required equity and your investors will provide the rest. How much equity is contributed by your investors?

Question 2:

Cashflows are distributed on a parri passu basis until reaching a 10% return. If the cash flow after debt service in year 1 is $10,000, what is the distribution received by your investors?

Question 3:

The cash flows after debt service for the three-year holding period are:

0 1 2 3
CF from operations 10,000 20,000 50,000

CF from sale

 655,000
Total (500,000) 10,000 20,000 705,000

What is the total distribution that is required in the third year for you and your investors to attain a 10% return? [Hint: construct the capital account and determine the total equity outstanding and interest due in the last year.]

Question 4:

What is the distribution made to the investors in year 3 based on a 75/25 promote?

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