What is the purchase price for this investment

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Question - An office building has the following investment characteristics:

Year 1 NOI $1,800,000

Year 2 NOI $1,900,000

Year 3 NOI $2,000,000

Year 4 NOI $2,100,000

Initial (going in) cap rate 6%

Loan Principal $18,000,000

Interest rate 4%

Amortization 30 years

Exit cap rate 7%

Holding period 3 years

Required -

1. What is the purchase price for this investment?

2. What is the loan to value ratio

3. What is the annual debt service?

4. What is the Debt Coverage Ratio for Year 1

5. What is the loan balance at the end of year 3?

Reference no: EM132963397

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