You are an employee of University Consultants, Limited, and have been given the following assignment....
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You are an employee of University Consultants, Limited, and have been given the following assignment. You are to present an investment analysis of a small retail incomeproducing property for sale to a potential investor. The asking price for the property is $; rents are estimated at $ during the first year and are expected to grow at percent per year thereafter. Vacancies and collection losses are expected to be percent of rents. Operating expenses will be percent of effective gross income. A fully amortizing percent loan can be obtained at percent interest for years total annual payments will be monthly payments times The property is expected to appreciate in value at percent per year and is expected to be owned for five years and then sold. Required: a What is the firstyear debt coverage ratio? b What is the terminal capitalization rate? c What is the investors expected beforetax internal rate of return on equity invested BTIRR d What is the NPV using a percent discount rate? e What is the profitability index using a percent discount rate?
You are an employee of University Consultants, Limited, and have been given the following assignment. You are to present an investment analysis of a small retail incomeproducing property for sale to a potential investor. The asking price for the property is $; rents are estimated at $ during the first year and are expected to grow at percent per year thereafter. Vacancies and collection losses are expected to be percent of rents. Operating expenses will be percent of effective gross income. A fully amortizing percent loan can be obtained at percent interest for years total annual payments will be monthly payments times The property is expected to appreciate in value at percent per year and is expected to be owned for five years and then sold.
Required:
a What is the firstyear debt coverage ratio?
b What is the terminal capitalization rate?
c What is the investors expected beforetax internal rate of return on equity invested BTIRR
d What is the NPV using a percent discount rate?
e What is the profitability index using a percent discount rate?
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