Q3(a). What is the leveraged internal rate of return for this project?Â

Q3(b). You propose to an Investor that they contribute 70% of the equity required for the project.Â In exchange, theyâ€™ll receive 60% of the cash flows from the project.

Show the Investorâ€™s cash flows and calculate the Investorâ€™s Internal Rate of Return by constructing an â€œInvestors Returnsâ€ tableÂ (EXCEL)

Q3(c). Show your cash flows and calculate your internal rate of return for the proposed by constructing an â€œEntrepreneurâ€™s Returnsâ€ table

**Question #4 Setup:**

When you originally purchased a small apartment building five years ago, you obtained a $5.4 million loan which carried a 7.00% interest rate, annual (not monthly) payments and a 25-year amortization period.Â The loan has a 10-year maturity but carries no pre-payment penalty. Â The annual loan payment is $463,000.

The Net Operating Income for the coming year (Year 6) is projected to be $722,000.

Since your loan doesnâ€™t mature for another five years, you have the option of keeping the loan in place.Â Nonetheless, youâ€™re considering refinancing.

Q4(a).Â If you kept your existing loan, what would your leveraged cash flow be in Year 6? Â Show your work.

Q4(b). At the end of Year 5 your loan balance is $4.8 million.Â Your lender offers to refinance yourÂ **existing loan balance**Â at the same 7.00% interest rate and 25-year amortization period as your original loan.

If you accepted this offer, what would your new loan payment and leveraged cash flow be for Year 6?Â What** percentage**Â changeÂ does this represent over your original leveraged cash flow for Year 6?

Q4(c). As an alternative, your lender offers to originate a new loan at an 80% loan-to-value which would carry the same 7.00% interest rate and 25-year amortization period as your original loan.

If you accepted this offer, what would your new loan payment and leveraged cash flow be for Year 6?Â What** percentage**Â change does this represent over your original leveraged cash flow for Year 6?

Q4(d). Another bank offers to originate a new loan equal to 80% of the propertyâ€™s value at a 6.00% interest rate and with a 30-year amortization period. For the purpose of valuation, the current market capitalization rate for this type of property is 9.25%

If you accepted this offer, what would your new loan payment and leveraged cash flow be for Year 6?Â What** percentage**Â change does this represent over your original leveraged cash flow for Year 6?

Â

Finally, how much equity will this proposal make available to you?

Subject | Business |

Due By (Pacific Time) | 12/02/2015 02:32 pm |

Tutor | Rating |
---|---|

pallavi Chat Now! |
out of 1971 reviews More.. |

amosmm Chat Now! |
out of 766 reviews More.. |

PhyzKyd Chat Now! |
out of 1164 reviews More.. |

rajdeep77 Chat Now! |
out of 721 reviews More.. |

sctys Chat Now! |
out of 1600 reviews More.. |

sharadgreen Chat Now! |
out of 770 reviews More.. |

topnotcher Chat Now! |
out of 766 reviews More.. |

XXXIAO Chat Now! |
out of 680 reviews More.. |