What would the beir be on such a project

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The property is expected to cost $5 million. NOI is estimated to be $475,000, including overages, during the first year, and to increase at the rate of 3 percent per year for the next five years. The property is expected to be worth $6 million at the end of five years. The improvement represents 80 percent of cost, and depreciation will be over 39 years. Assume a 28 percent tax bracket for all income and capital gains and a holding period of five years.

a. Compute the BTIRR and ATIRR after five years, taking into account the equity participation.

b. What would the BEIR be on such a project? What is the projected cost of the equity participation financing?

c. Is there favorable leverage with the proposed loan?

Reference no: EM131326740

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