Question

In: Finance

A retail shopping center is purchased for $2.1 million. During the next five yearsthe property appreciates...

A retail shopping center is purchased for $2.1 million. During the next five yearsthe property appreciates at 2 percent per year. At the time of purchase, the property is financed with a 70 percent loan-to-value ratio for 25 years at 6 percent (annual) with monthly amortization. At the end of year 5, the property is sold with 4 percent selling expenses. What is the before-tax equity reversion?
A. 804,192
B. 826,937
C.860,182
D.870,581
E.903,825

Solutions

Expert Solution

jeff jeffy answered 4 months ago
Next > < Previous

Related Solutions

A retail shopping center is purchased for $2.1 million. During the next five years, the property...
A retail shopping center is purchased for $2.1 million. During the next five years, the property appreciates at 2 percent per year. At the time of purchase, the property is financed with a 70 percent loan-to-value ratio for 25 years at 6 percent (annual) with monthly amortization. At the end of year 5, the property is sold with 4 percent selling expenses. What is the before-tax equity reversion? Question 18 options: a) $804,182 b) $826,937 c) $860,182 d) $870,581 e)...
Cliborn Retail Company negotiated a lease for a retail store in a new shopping center that...
Cliborn Retail Company negotiated a lease for a retail store in a new shopping center that included 30 stores. The accountant for Cliborn, Gail Naugle, was given the lease agreement to analyze. She looked into whether the lease was a capital lease. The lease did not include a transfer of ownership or an option to purchase. The lease term was for 20 years, and the present value of the minimum lease payments was $100,000. Unsure of the fair market value...
Cliborn Retail Company negotiated a lease for a retail store in a new shopping center that...
Cliborn Retail Company negotiated a lease for a retail store in a new shopping center that included 30 stores. The accountant for Cliborn, Gail Naugle, was given the lease agreement to analyze. She looked into whether the lease was a capital lease. The lease did not include a transfer of ownership or an option to purchase. The lease term was for 20 years, and the present value of the minimum lease payments was $100,000. Unsure of the fair market value...
A property has first year NOI of $1.5 million. NOI grows at 7% during the next...
A property has first year NOI of $1.5 million. NOI grows at 7% during the next two years. In year four, NOI goes drops 50% due to a lost tenant. You are very lucky and replace the tenant. Year five NOI is 4X year four. (continues below…) What is year 5 NOI? continue…You have a $10 million mortgage on this property, at 5% interest, amortization of twenty years. There are two partners who have invested $3 million total in the...
You purchase a fully-occupied shopping center for $5,000,000. The NOI is $750,000. The property has no...
You purchase a fully-occupied shopping center for $5,000,000. The NOI is $750,000. The property has no debt. You are considering obtaining debt in order to maximize your return. If a Lender is willing to provide a loan at a 75% LTV, 3.00% rate and 20-year amortization schedule, what is your: (a) Unlevered Return, and (b) Levered Return?
The retail stores in the North Towne Square shopping center are the following: 00 Elder-Beerman 08...
The retail stores in the North Towne Square shopping center are the following: 00 Elder-Beerman 08 Kay-Bee Toy & Hobby 16 Pearle Vision Express 01 Sears 09 Lion Store 17 Dollar Tree 02 Deb Shop 10 Bootleggers 18 County Seat 03 Frederick's of Hollywood 11 Formal Man 19 Kid Mart 04 Petries 12 Leather Ltd. 20 Lerner 05 Easy Dreams 13 B Dalton Bookseller 21 Coach House Gifts 06 Summit Stationers 14 Pat's Hallmark 22 Spencer Gifts 07 E. Brown...
A foreign investor borrowed $36 million for the acquisition of a 180,000 square foot shopping center...
A foreign investor borrowed $36 million for the acquisition of a 180,000 square foot shopping center in Boulder, Colorado at a purchase price of $54 million. The mortgage loan was a 30-year fully amortizing fixed rate loan at a stated annual interest rate of 5% payable monthly and the borrower was charged 2 points by the lender at closing. What was the effective annual interest rate on the loan if the loan was carried to maturity? What was the effective...
You purchased a rental property that generates $50,000 during the first year. The property will produce...
You purchased a rental property that generates $50,000 during the first year. The property will produce an additional 49 cash flows growing at a rate of 4 percent per year. If the interest rate is 8 percent compounded yearly and rental payments are made at the beginning of each year, what should the value of this property be?
A popular online retail website was interested in consumer spending during the holiday shopping weekend after...
A popular online retail website was interested in consumer spending during the holiday shopping weekend after Thanksgiving. They collect data on a random sample of 400 shoppers, particularly noting how much money each shopper spent. The following histogram was constructed using the data: The retailer determines that this sample had an average of $84.71 with a standard deviation of $46.87. (1 point) What is the best point estimate for the true mean amount of money spent by all shoppers at...
Property purchased for ?$3 million was revalued on 1 July 2017 to ?$4.5 million. Accumulated depreciation...
Property purchased for ?$3 million was revalued on 1 July 2017 to ?$4.5 million. Accumulated depreciation at the time of revaluation was $ 500 000. The property? hadn't previously been revalued. At the time of the? revaluation, the property was expected to have a further useful life of 25 years with no residual value. On 1 July 2021 the property was again? revalued, to ?$3.3 million. Requirement Show the journal entries to? record: (a) the initial? revaluation, (b) depreciation for...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT