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A borrower wants to finance an apartment building costing $2 million with a 75%, 25 year loan at the interest rate of 6%. The projects' NOI is expected to be $150,000 during first year. Assuming that NOI and the building will increase 5% each year. The lender will require an initial debt coverage ratio of at least 1.25.
a. Would the lender be likely to make the loan to the borrow? Show your cash flow statement for a 3-year period. What would be the borrower's before-tax yield on equity?
b Would the lender be likely to make the loan to the borrower if the mortgage rate is 8%?
c. What would be the maximum loan amount that the lender would make if the debt coverage ratio was 1.2 for year 1? What would be the loan-to-value ratio?
A firm currently has no debt. The firm has 15 million shares outstanding and those shares currently have a market price of $25 per share. The firm is contemplating selling $50 million in bonds and using the proceeds to repurchase shares of stock. do ..
Credit Card Company will charge you 1.25% of interest/month for the unpaid balance. Your unpaid balance is $2000 for 2 years. Find the actual effective rate of interest/year that you are paying?
(Net present value calculation) Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $4,000,000 and would generate annual net cash inflows of $900,000 per yea..
The Pasta corporation a Brooklyn based manufacture of homemade pasta needs $1,000,000 and can raise this through debt at an annual rate of 10 percent, or preferred stock at an annual cost of 7 percent. The corporation has a 40 percent tax rate. You a..
Central Systems, Inc. has a weighted average cost of capital of 8 percent. The firm has an after-tax cost of debt of 4 percent and a cost of equity of 12 percent. What is the firm's debt-equity ratio?
If the relevant tax rate is 30 percent, what is the aftertax cash flow from the sale of this asset?
Your current age is 22 and you plan to retire at age 67. At retirement you want to have a “nest egg” of $3 million in today’s buying power. Over that time-period you expect inflation to average 3% per year. If you can earn 3.8% APR, compounded monthl..
Timothy Clum is in the 25 percent tax bracket and is considering the tax consequences of investing $2,000 at the end of each year for 30 years, assuming the investment earns 8 percent annually.
Analyze the roles and responsibilities of financial managers in confirming compliance with federal and shareholder requirements
Suppose you own a portfolio of British securities valued at $430,000. The exchange rate is currently at $1 = £0.57. A currency contract on British pounds is set at 62,500 pounds. How many contracts must you purchase to protect your portfolio from exc..
What was the stock’s return for the missing year? What is the standard deviation of the stock’s returns?
you expect kt industries kti will have earnings per share of 3 this year and expect that they will pay out 1.50 of
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