Question

In: Accounting

2. An office building has the following investment characteristics: Year 1 NOI

2. An office building has the following investment characteristics:

Year 1 NOI $2,100,000

Year 2 NOI $2,200,000

Year 3 NOI $2,300,000

Year 4 NOI $2,400,000

Initial (going in) cap rate 7%

Loan Principal $18,000,000

Interest rate 5%

Amortization 30 years

Exit cap rate 8%

Holding period 3 years

Solve for each of the following:

Purchase price

Loan to value ratio

Annual debt service

Debt service coverage ratio for year 1

Loan balance at the end of year 3

Equity (Levered) IRR

Expert Solution

ekkarill92 answered 1 year ago

An office building has the following investment characteristics: Year 1 NOI $2,100,000 Year 2 NOI $2,200,000...

An office building has the following investment characteristics: Year 1 NOI $2,100,000 Year 2 NOI $2,200,000 Year 3 NOI $2,300,000 Year 4 NOI $2,400,000 Initial (going in) cap rate 7% Loan Principal $18,000,000 Interest rate 5% Amortization 30 years Exit cap rate 8% Holding period 3 years Solve for each of the following: Purchase price Loan to value ratio Annual debt service Debt service coverage ratio for year 1 Loan balance at the end of year 3 Equity (Levered) IRR

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