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1. You are considering an investment in a small medical office building in Hackensack, NJ. The asking price for the building is $3.5M and a local commercial bank has offered to provide financing in the form of a 5-year mortgage with a 25-year amortization period. The interest rate on the mortgage is 6% and payments are made on an annual basis. If the maximum loan-to-value (LTV) ratio for the loan is 60%, what are the most the lender will provide based on this condition?
2. What is your annual mortgage payment assuming that the lender will provide financing at a 60% LTV?
3. The lender also requires that the debt-coverage-ratio (DCR) for the loan be at least 1.20. If you estimate NOI in your first year of ownership to be $200,000, what is the DCR for the loan when the loan amount is based on the 60% LTV?
4. What is your equity investment in the building if the lender approves the loan amount based on a 60% LTV and requires that you pay $42,000 in origination fees at closing?
5. If the lender approves the loan amount based on a 60% LTV and the value of the property has increased by 10% in total at the time at which your loan matures, what is the value of your equity in the property at that time?
Hasco Corp. is a multinational provider of lumber and milling equipment. Estimate the cost of capital of Hasco Corp (using traditional WACC equation)
Futuers and options contracts are " on balance sheet " items. The seoeration of invesment banking and commercial banking in the US was ended by financial services modernization Act.
Prepare the adjusting entry to record the depreciation expense for the current year.
Hooper Printing Inc. has bonds outstanding with 14 years left to maturity. The bonds have an 9% annual coupon rate and were issued 1 year ago at their par value $1000. However, due to changes in interest rates, the bond's market price has fallen $120..
An investor has two investments A and B. The investor believes that investment A is equally likely to increase by $1,000 or to decrease by $1,000 by the end of the year.
What annual amount must you invest each year until you retire to provide this amount?
What percentage appreciation or depreciation does this forecast imply over the three-year period?
Use the free cash flow approach to value the firm’s equity.
You plan to analyze the value of a potential investment by calculating the sum of the present value of its expected cash flows.
The joint-cost allocation method that recognizes the revenues at split-off but does not consider any further processing costs is the:
Calculate the future worth in year 12 of an investment fund that gets a deposit of $110,000 in the first 4 year,
Icarus Airlines is proposing to go public, and you have been given the task of estimating the value of its equity. Management plans to maintain debt at 27% of the company’s present value, and you believe that at this capital structure the company’s d..
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