User Account

All Pages

Purchase of a retail development

Assignment Help Finance Basics
Reference no: EM132042391

You need to borrow $2,500,000 for the purchase of a retail development. You expect to sell the property after 5 years and have the following mortgage options:

a. A 30-year fixed rate mortgage at 8% with no points or prepayment penalties

b. A 30-year fixed rate mortgage at 7% with 3 points and a 1% prepayment penalty if repaid within the first 7 years

c. A 30-year adjustable rate mortgage with no points or prepayment penalty. Mortgage contract rates for loans of this size and risk are currently 6.75%. Rates are expected to rise to 7% in year 2, 7.25% in year 3, 7.75% in year 4, and 8% in year 5.

Which loan option gives you the lowest effective borrowing cost?

Reference no: EM132042391

Questions Cloud

The wacc assumes that the components weights : What is the true initial cost figure Southern should use when evaluating its project? The WACC assumes that the components weights are based on:
Calculate project internal rate of return : Calculate the project's internal rate of return. Calculate the project's net present value.
Marker risk is also called : Stock which has fixed payments and failure of payments which do not lead to bankruptcy is classified as. Marker risk is also called:
Describe one to two different kinds of tests : Describe one to two different kinds of tests that can be performed for the Disaster Recovery Plan. Need atleast 300-350 words.
Purchase of a retail development : You need to borrow $2,500,000 for the purchase of a retail development. You expect to sell the property after 5 years and have the following mortgage options:
Perpetual stream of annual payments : A perpetual stream of annual payments starting at $500 in one year and increasing at 5% per year thereafter.
Create the pro forma cash flow statement : When getting into a project of this type you generally consider a 5-year holding period and look for a 12% rate of return.
Determine at least three business functions : Consider collaboration as one of the social IT categories in which Facebook, LinkedIn, blogs, and Twitter are used to extend the reach of stakeholders.
Improvement rent charged back to the tenant annually : What is the tenant improvement rent charged back to the tenant annually?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd