Finance

posted by .

You are considering the purchase of an industrial
warehouse. The purchase price is $1 million.
You expect to hold the property for five years.
You have decided to finance the acquisition with
the $700,000 loan, 10 percent interest rate, 30-
year term, and annual interest-only payments.
(That is, the annual payment will not include any
amortization of principal.) There are no up-front
financing costs. You estimate the following cash
flows for the first year of operations:
$135,000 Effective gross income
27,000 Operating expenses
$108,000 NOI
a. Calculate the overall rate of return (or “cap
rate”).
b. Calculate the debt coverage ratio.
c. What is the largest loan that you can obtain
(holding the other terms constant) if the
lender requires a debt service coverage ratio
of at least 1.2?

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. SMU

    You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year mortgage loan for 80 percent of the $2,300,000 purchase price. The monthly payment on this loan will be $15,000. Therefore, the APR on …
  2. finance

    You take out a 30- yr mortgage loan, purchase price is $120,000 put $20,000 down and finances the balance of $100,000 at fixed annual loan rate of 12%, what will be your monthly payment?
  3. Finance

    You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year mortgage loan for 80 percent of the $2,800,000 purchase price. The monthly payment on this loan will be $17,000. What is the APR and ERA?
  4. Finance Math

    Jane made a down payment of 1500 dollars toward the purchase of a car. To pay the balance of the purchase price, she has secured a loan from her bank at the nominal rate of 5.8 percent per year compounded monthly. Under the terms of …
  5. Finance

    You have just purchased a new warehouse. To finance the purchase, you have arranged for a 30-year mortgage loan for 80 percent of the $2,800,000 purchase price. The monthly payment on the loan will be $22,000. a. What is the effective …
  6. finance

    You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 25-year mortgage for 75 percent of the $3,600,000 purchase price. The monthly payment on this loan will be $17,700. What is the APR on this loan?
  7. Finance

    You are considering borrowing $150,000 to purchase a new home. a. Calculate the monthly payment needed to amortize an 8 percent fixed-rate 30-year mortgage loan. b. Calculate the monthly amortization payment if the loan in (a) was …
  8. f

    You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 35-year mortgage for 85 percent of the $3,100,000 purchase price. The monthly payment on this loan will be $17,200. What is the APR on this loan?
  9. FINANCE

    You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 35-year mortgage loan for 75 percent of the $3,250,000 purchase price. The monthly payment on this loan will be $15,800. Requirement 1: What …
  10. Business finance

    anthony has decided to purchase a $19000 car. he plans to put 20% down toward the purchase and to finance the rest at a 6.8% interest rate for 4 years. find the monthly payment

More Similar Questions