You have purchased a multi-tenant office building for $15,000,000. Your acquisition costs associated with this purchase...

You have purchased a multi-tenant office building for $15,000,000. Your acquisition costs associated with this purchase are $25,000. The estimated land value is $3,000,000, of which you estimate the depreciable land portion at $1,000,000. You estimate the 7-year property at a value of $2,000,000. You have arranged a 70% LTV, 7-year mortgage at a 5.25% interest rate with 2 points and a 25 year amortization period. Your projected NOI in the next two years is $1,200,000 and 1,250,000 which includes projected CAPEX (above line) of $100,000 and $102,000. Your marginal tax rate is 43.4%.

What is your debt service for Year 1 and Year 2?

What is your BTCF for Year 1 and Year 2?

What is your interest expense for Year 1 and Year 2?

What is your land depreciation for Year 1 and Year 2?

What is your 7-year depreciation for Year 1 and Year 2?

What is your building depreciation for Year 1 and Year 2?

What is your amortized finance cost for Year 1 and Year 2?

What is your taxable income for Year 1 and Year 2?

What is your tax due for Year 1 and Year 2?

What is your ATCF for Year 1 and Year 2?

Expert Solution

jeff jeffy answered 2 years ago

You are considering the acquisition of a small office building. The purchase price is $775,000. Seventy-five...

You are considering the acquisition of a small office building. The purchase price is $775,000. Seventy-five percent of the purchase price can be borrowed with a 30-year, 7.50% mortgage. Up-front financing costs will total 3.00% of the loan amount. The expected cash flows assuming a 5-year holding period are as follows: Year NOI 1 $48,492 2 $53,768 3 $59,282 4 $65,043 5 $71,058 The cash flow from the sale of the property is expected to be $1,000,000. What is the...

You are considering the purchase of a parking deck close to your office building. The parking...

You are considering the purchase of a parking deck close to your office building. The parking deck is a 15-year old structure with an estimated remaining service life of 25 years. The tenants have recently signed long-term leases, which leads you to believe that the current rental income of $250,000 per year will remain constant for the first five years. Then the rental income will increase by 10% for every five-year interval over the remaining asset life. Thus, the annual...

You are considering the purchase of a parking deck close to your office building. The parking...

You are considering the purchase of a parking deck close to your office building. The parking deck is a 15-year old structure with an estimated remaining service life of 25 years. The tenants have recently signed long-term leases, which leads you to believe that the current rental income of$250,000 per year will remain constant for the first five years. Then the rental income will increase by 10% for every five-year interval over the remaining asset life. Thus, the annual rental...

Hart Company sells and delivers office furniture across Western Canada. The costs associated with the acquisition...

Hart Company sells and delivers office furniture across Western Canada. The costs associated with the acquisition and annual operation of a delivery truck are given below: Insurance$3,593 Licences$205 Taxes (vehicle)$122 Garage rent for parking (per truck)$1,220 Depreciation ($25,500 ÷ 5 years)$5,100 Gasoline, oil, tires, and repairs$0.20/km 3. Assume that the company decides to use the truck during the second year. Near year-end, an order is received from a customer over 1,000 kilometres away. What costs from the previous list are relevant in a decision between...

You are the owner of a 65,000 square foot office building. You purchased the building five...

You are the owner of a 65,000 square foot office building. You purchased the building five years ago for $11,500,000. During that entire time the building was triple net leased to a tenant who was also responsible for all maitenance and capital upkeep. The net rent the tenant paid was flat at $12.50 per square foot per year. You have just negotiated a lease extension which will raise the rent to $14.00 per square foot for the next 10 years....

A governmental entity is the recipient of a bequest of a multi-story office building that the...

A governmental entity is the recipient of a bequest of a multi-story office building that the government intends to use as a new city hall. The building has a historical cost of $850,000; a book value in the hands of the benefactor of $700,000; and a fair value of $1,050,000. The city should recognize on its governmental fund financial statements, donations revenue of a) $-0-. b) $700,000. c) $850,000. d) $1,050,000 Explanation to why answer is d A governmental entity...

A government is the recipient of a bequest of a multi-story office building that the government...

A government is the recipient of a bequest of a multi-story office building that the government intends to use as a new city hall. The building has a historical cost of $850,000; a book value in the hands of the benefactor of $700,000; and a fair value of $1,050,000. The city should recognize on its governmental fund financial statements donations revenue of $-0-. $700,000. $850,000. $1,050,000 Explanation to the answer please

You are field manager for the general contractor on a multi-story office building under construction. The...

You are field manager for the general contractor on a multi-story office building under construction. The project has risen all 15 floors above the foundation. The roof is on and the exterior façade of the structure, consisting of alternating blue glass ribbon windows and red granite panels, has “dried in” the project many weeks ago. On the third, seventh and fifteenth floors, the executive offices located on the corners of the building have blue glass doors that lead outside to...

You have just purchased a car and, to fund the purchase, you borrowed $25,500. If your...

You have just purchased a car and, to fund the purchase, you borrowed $25,500. If your monthly payments are $360.24 for the next 7 years, what is the APR of the loan?

Adjusting Journal Entry using Activity based method: Purchased Machinery $10,000. Costs associated with the purchase are:...

Adjusting Journal Entry using Activity based method: Purchased Machinery $10,000. Costs associated with the purchase are: freight-in costs of $300, and construction of specialized platform to hold the machine, $500. All amounts are paid with cash. Estimated useful life is 20,000 machine hours, with a $1,000 Salvage Value.

Question

You have purchased a multi-tenant office building for $15,000,000. Your acquisition costs associated with this purchase...

Solutions

Expert Solution

Related Solutions

You are considering the acquisition of a small office building. The purchase price is $775,000. Seventy-five...

You are considering the purchase of a parking deck close to your office building. The parking...

You are considering the purchase of a parking deck close to your office building. The parking...

Hart Company sells and delivers office furniture across Western Canada. The costs associated with the acquisition...

You are the owner of a 65,000 square foot office building. You purchased the building five...

A governmental entity is the recipient of a bequest of a multi-story office building that the...

A government is the recipient of a bequest of a multi-story office building that the government...

You are field manager for the general contractor on a multi-story office building under construction. The...

You have just purchased a car and, to fund the purchase, you borrowed $25,500. If your...

Adjusting Journal Entry using Activity based method: Purchased Machinery $10,000. Costs associated with the purchase are:...