Homework is for my real estate finance and investments 16 edition .

1) Chapter 5

1. A price level adjusted mortgage (PLAM) is made with the following terms:

Amount = $95000

Initial interest rate = 4 percent

Term = 30 years

Points = 6 percent

Payments to be reset at the beginning of each year.

Assuming inflation is expected to increase at the rate of 6 percent per year for the

next five years:

a. compute the payment at the beginning of each year (BOY)

b. what is the loan balance at the end of the fifth year?

c. what is the yield to the lender on such a mortgage?

2. A basic Arm is made for $200,000 at an initial interest rate of 6 percent for 30

years with an annual reset date. the borrower believes that the interest rate at

the beginning of year (BOY) 2 will increase to 7 percent.

a. assuming that a fully amortizing loan is made, what will the monthly payments be

during year 1?

b. Based on a what will the loan balance be at the end of the year (EOY)1?

c. Given that the interest rate is expected to be 7 percent at the beginning of year 2

what will the monthly payments be during year 2

d. What will be the loan balance at the EOY2?

e. What would be the monthly payments in year 1 if they are to be interest only?

2) Chapter 12

1. And investor would like to purchase a new apartment property for $2 million.

however, she faces the decision of where to use 70 percent or 80 percent

financing. the 70 percent loan can be obtained at 10 percent interest for 25 years.

the 80 percent loan can be obtained at 11 percent interest for 25 years.

NOI is expected to be 190,0000 per year and increase at 3 percent annually, the same

rate at which the property is expected to increase in value. The building and

improvements represent 80 percent of value and will be depreciated over (1/27.5 per

year) the project is expected to be sold after five years. assume a 36 percent tax

bracket for all income and capital gains taxes.

a) What would the BTIRR and ATIRR be at each level of financing (assume

monthly mortgage amortization)?

b) What is the breakeven interest rate (BEIR) for this project?

c) What is the marginal cost of the 80 percent loan? what does this mean?

d) Does each loan offer favorable financing leverage? which would you

recommend?

2. You are advising a group of investors who are considering the purchase of a shopping

center complex they would like to finance 75 percent of the purchase price. a loan has

been offered to them on the following terms: the contract interest rate is 10 percent

and will be amortized with monthly payment over 25 years. the loan also will have an

equity participation of 40 percent of the dash flow after debt service. the loan has a

lockout provision that prevents it from being prepaid before year 5.

The property is expected to cos t $5 million. NOI is estimated to be $475000 including overages,

during the first year, and to increase 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 year. 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 ATTIRR 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?

Premium Custom Essays
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.