A property owner has provided you with the following information. Assume the owner has no other...

A property owner has provided you with the following information. Assume the owner has no other assets or liabilities. The annual gross revenue is $3,275,000. The debt service payment on the loan is $147,000 per month. The capitalization rate is 8%. Assets: Cash $ 1,000,000 Land 1,500,000 Building 29,500,000 Total Assets $ 32,000,000 Liabilities & Equity: Nonrecourse Liabilities $ 25,000,000 Partner’s Capital 7,000,000 Total Liabilities & Capital $ 32,000,000

14. What is the property’s NOI?

Calculate the Debt Service Coverage Ratio?

What is the Debt to Asset Ratio?

Last year’s Debt Ratio for the property was 74%. The industry average Debt to Asset ratio is 82%. Based on the available information would you consider this to be a low, normal or high risk investment and why?

What is the Effective Gross Income Multiplier?

Expert Solution

Debt Service Payment per Month	$ 1,47,000.00
Yearly Payment	$ 17,64,000.00
Gross Revenue (EBITDA)	$ 32,75,000.00
Debt Service Coverage Ratio	=EBITDA/Debt Service Payment
Debt Service Coverage Ratio	1.857

Let take Capitalization Rate as Loan Interest
Liabilities	$ 25,00,000.00
Yearly Debt Service Payment	$ 17,64,000.00
Total (Including Interest)	$ 42,64,000.00
Principle	$ 39,48,148.15	+4264000/1.08
Interest	$ 3,15,851.85

Gross Revenue (EBITDA)	$ 32,75,000.00
Less: Interest	$ 3,15,851.85
Net Operating Income	$ 29,59,148.15

Debt to Asset Ratio
Debt	2500000
Total Assets	3200000
Debt to Total Assets	78.13%

Last Year	74%
Industry Average Debt Asset Ratio	84%
Company Debt to Asset Ratio is less than Industry Average so it is Low risky

Effective Gross Income Multiplier	Total Assets/Gross Income
	0.977099

ekkarill92 answered 3 years ago

The following information is provided for two items of property for a company. Property A was...

The following information is provided for two items of property for a company. Property A was purchased five years ago for $400,000. It was intended to be used to build another factory, but the company has now reorganised its original factory and it is no longer required. The company now intends to sell it. The current property market has dropped but it is expected to rise when interest rates fall. If sold now, the property is expected to realise $360,000....

Assume you are provided the following 3 types of information and for each case you are...

Assume you are provided the following 3 types of information and for each case you are assigned to calculate a 90% confidence interval around the sample mean. Answer the questions below based on the provided information. An airline wants to estimate the number of tickets sold for a daily flight between Los Angeles and New York. Suppose a sample of 40 flights gives a sample mean of 125.5 (Assume that the sample standard deviation is σ = 20.5 and the population...

You are provided with the following information on four stocks. Assume that the base year is...

You are provided with the following information on four stocks. Assume that the base year is Dec 2010 and all splits take place on this date. That is after close of trading on December 31, 2010. Stock A and B have a 2 for 1 split at the end of trading on December 31, 2010. Use this information to answer the questions listed below. 31-Dec-10 31-Dec-10 31-Dec-11 31-Dec-11 31-Dec-10 Dec-11 Split Stock Price Shares Price Shares MV MV A $...

6. A property insurer provided the following information: Premiums written &

6. A property insurer provided the following information: Premiums written $55,000,000 Expenses incurred 9,000,000 Incurred losses & loss adjustment expenses 38,000,000 Earned Premiums 42,000,000 a. What is the loss ratio? (1 point) b. What is the expense ratio? (1 point) c. What is the combined ratio? (1 point) d. What does it mean for an insurer to have a combined ratio > 1? Why might this be acceptable to the insurer? (1 point)

Question: Peter is the sole owner of a T-Shirt Shop. He has provided you with the following...

Question: Peter is the sole owner of a T-Shirt Shop. He has provided you with the following information in relation to the 2018 budget:- Estimated sales units for the year 40,000 Selling price per unit $30 Estimated total sales $1,200,000 Based on the above sales units and dollars, the following expenses are expected to be incurred annually:- Cost of Goods Sold (@ $12 per unit) $480,000 Rent of Premises (75% Shop, 25% Office) $44,040 Salaries – Sales Staff $168,000 Salaries – Office Staff $80,400 Delivery Expenses (@$1.25 per...

Your client is a wealthy investor and property owner. Your client provides you with information (as...

Your client is a wealthy investor and property owner. Your client provides you with information (as detailed below) about various transactions that took place between 1 July 2019 and 30 June 2020. 1) Warehouse: On 30 April 1985 your client acquired a large parcel of vacant land at Rocklea, a suburb in Brisbane with a significant number of commercial buildings. The purchase price was $180,000 and your client incurred $2,000 in legal fees and $18,000 in transfer duty when purchasing...

A property insurer provided the following information: Determine the loss, expense and combined ratios.

A property insurer provided the following information: Determine the loss, expense and combined ratios.Premiums written $55,000,000Expenses incurred 9,000,000Incurred losses & loss adjustment expenses 38,000,000Earned Premiums 42,000,000

You are the Property Manager for Prestige Ville, and theCorporate office has provided you with...

You are the Property Manager for Prestige Ville, and the Corporate office has provided you with information that must be shared with all tenants. In an effort to present your information in a thorough manner, you will have to compose a two-paragraph speech that should maintain the art of goodwill.

Asplund Corporation has provided the following information:

Asplund Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 6.25 Direct labor $ 2.90 Variable manufacturing overhead $ 1.30 Fixed manufacturing overhead $ 18,000 Sales commissions $ 1.50 Variable administrative expense $ 0.45 Fixed selling and administrative expense $ 7,500 Required: a. For financial reporting purposes, what is the total amount of product costs incurred to make 5,000 units? b. For financial reporting purposes,...

You are provided with the following information for Kameo Corp.: Bonds: The firm has $10,000,000 in...

You are provided with the following information for Kameo Corp.: Bonds: The firm has $10,000,000 in 5% coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 102% of the par; the bonds make semi-annual payments. Preferred Shares: 25,000 shares of $50 par 9% preferred stock outstanding, currently selling for $65 per share. Common Shares: 400,000 shares outstanding, selling for $50 per share. Kameo expects to pay a dividend of $2.34 per share and the expected growth rate...

Question