What are the principal and interest payments in year three

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Question - Your client is considering purchasing a mixed-use building for $525,000 with a $225,000 down payment and a 30-year, $300,000 mortgage with a 7.5% rate (assume monthly payments). No points or fees will be charged.

The property is fully leased, and lease income will be as follows:

Year 1: $51,200

Year 2: $59,400

Year 3: $63,700

Year 4: $67,300

Year 5: $72,100

Year 6: $75,542

Operating expenses will be $25,400 in year one and are expected to increase by 5% annually. After five years, your client intends to sell the property. The client intends to establish the sale price by capitalizing the sixth year NOI at 10%. The client has suggested using a cost of sale estimate of 4%. Perform a cash flow analysis for this property, rounding all figures to the nearest dollar. What are the principal and interest payments in year three?

Reference no: EM133163684

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