You have the opportunity to buy a single tenant, retail building in West Campus. The all in purchase price is 1,000,000. You have been able to source a five-year loan, with a 70% LTV, 5% fixed interest rate, with a 25-year amortization schedule. You pay this loan once a year at the end of the year. The NNN rent in year 1 is expected to be $82,000, and should grow at 3% a year. You expect the vacancy to be 6%. The operating expenses in year 1 are expected to $45,000 and will grow at 3% a year. Assume that you are going to sell this building at the end of the third year (on the Yr. 4 NOI) at a 7.5% exit cap with 2% associated sales costs. Assume there are no tax implications.
1. What is the Gross Potential Income in year 3?
2. What is the dollar amount for vacancy in year 2?
3. What is the NOI in year 1?
4. How much is the yearly payment for the loan?
5. What is the project's NPV assuming a 12% discount rate?
6. Based on a three-year hold, what is the project IRR?
7. Based on a three-year hold, what is the Equity Multiple?
Word Problem 1 (3 points each) 8 51.000.000. You have been able to source a five year loan with a 70 LTV, 5fixed interest rate, with a 25- You have the opportunity to buy a single tenant, retail building in West Campus. The all-in purchase price year amortization schedule. You pay this loan once a year at the end of the year. The NNN rent in Year 1 expected to be $82,000 and should grow at 3% a year. You expect the vacancy to be 6. The operating expenses in Year I are expected to be 545.000 and will grow at 3 year. Assume that you are going to sell this building at the end of the third year on the ye. 4 NO) at a 7.5x est cap with 2 associated sales costs. Assume there are no tax implications 27. What is the Grass Potential income in year 3? 28. What is the dollar amount for vacancy in year 2? 29. What is the Nol in year 17 30. How much is the yearly payment for the loan? 31. What is the project's NPV assuming a 12% discount rate? 32. Based on a three-year hold, what is the project IRR? 31. Based on a three-year hold, what is the Equity Multiple? Word Problem 1 (3 points each) 8 51.000.000. You have been able to source a five year loan with a 70 LTV, 5fixed interest rate, with a 25- You have the opportunity to buy a single tenant, retail building in West Campus. The all-in purchase price year amortization schedule. You pay this loan once a year at the end of the year. The NNN rent in Year 1 expected to be $82,000 and should grow at 3% a year. You expect the vacancy to be 6. The operating expenses in Year I are expected to be 545.000 and will grow at 3 year. Assume that you are going to sell this building at the end of the third year on the ye. 4 NO) at a 7.5x est cap with 2 associated sales costs. Assume there are no tax implications 27. What is the Grass Potential income in year 3? 28. What is the dollar amount for vacancy in year 2? 29. What is the Nol in year 17 30. How much is the yearly payment for the loan? 31. What is the project's NPV assuming a 12% discount rate? 32. Based on a three-year hold, what is the project IRR? 31. Based on a three-year hold, what is the Equity Multiple
