Anybody work in Finance or Real Estate?
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6 replies
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K
Anybody work in Finance or Real Estate?
SlammedAcroRam
+1y
I'm working on a problem for a class of mine. Its worth like 10% of my grade so I'd like to make sure I have the right answers. I have to show my work but I would be interested in any help someone could give me. Feel free to send me an e-mail or PM. The problem is as follows:
You are considering the purchase of an apartment building. You have surveyed the market and have made the following assumptions/predictions.
PGI = $25,390 for the coming year, increasing at 3% per year thereafter.Vacancies and Bad Debts = 4.90% of PGI.Operating Expenses = 43.90% of EGI.Asking Price = $143,900.Acquisitions costs are 2% of the purchase price.Financing: 80% LV, 11.90% interest, 25 years.Financing costs are 2.5% of the loan amount.Depreciation: 90% of the purchase price is depreciable. The property value is expected to increase 5% per year.Selling expenses are expected to be 7. 390% of selling price.Assume you purchase the property on January 1st and plat to sell approximately 5 years later on December 31stAssume the tax rate is 28%
Generate neat schedules for EI, ATCF, and ATER. However, place your final answers here:
EI = _______________________ATCF(1) = __________________ATCF(2) = __________________ATCF(3) = __________________ATCF(4) = __________________ATCF(5) = __________________ATER = _____________________
The IRR for this project = ___________________
If your required rate of return is 12.39%, the NPV for this project = ______________________
Should you purchase this property? Circle one: YES NO
You are considering the purchase of an apartment building. You have surveyed the market and have made the following assumptions/predictions.
PGI = $25,390 for the coming year, increasing at 3% per year thereafter.Vacancies and Bad Debts = 4.90% of PGI.Operating Expenses = 43.90% of EGI.Asking Price = $143,900.Acquisitions costs are 2% of the purchase price.Financing: 80% LV, 11.90% interest, 25 years.Financing costs are 2.5% of the loan amount.Depreciation: 90% of the purchase price is depreciable. The property value is expected to increase 5% per year.Selling expenses are expected to be 7. 390% of selling price.Assume you purchase the property on January 1st and plat to sell approximately 5 years later on December 31stAssume the tax rate is 28%
Generate neat schedules for EI, ATCF, and ATER. However, place your final answers here:
EI = _______________________ATCF(1) = __________________ATCF(2) = __________________ATCF(3) = __________________ATCF(4) = __________________ATCF(5) = __________________ATER = _____________________
The IRR for this project = ___________________
If your required rate of return is 12.39%, the NPV for this project = ______________________
Should you purchase this property? Circle one: YES NO
kboring
+1y
CFAT=CFBT(1-t)+Depr(t)
What does EI and ATER stand for??
What does EI and ATER stand for??
SlammedAcroRam
+1y
ATER is after tax equity reversion
EI is expected income
EI is expected income
SlammedAcroRam
+1y
Any ideas on how to finish the first year?
Year 1 2 3 4 5
PGI 25,390
- VC 1,244.11
= EGI 24,145.89
- OE 10,600.05
- CAPX
= NOI
- DS
= BTCF
- TAX
= ATCF
PGI = Projected Gross Income
VC = Vacancy and Collection Costs
EGI = Expected Gross Income
CAPX= Capital Expenditures
NOI= Net Operating Income
DS= Debt Services
BTCF= Before Tax Cash Flows
TAX = Tax
ATCF= After Tax Cash Flow
Year 1 2 3 4 5
PGI 25,390
- VC 1,244.11
= EGI 24,145.89
- OE 10,600.05
- CAPX
= NOI
- DS
= BTCF
- TAX
= ATCF
PGI = Projected Gross Income
VC = Vacancy and Collection Costs
EGI = Expected Gross Income
CAPX= Capital Expenditures
NOI= Net Operating Income
DS= Debt Services
BTCF= Before Tax Cash Flows
TAX = Tax
ATCF= After Tax Cash Flow
baggedmitsu
+1y
i work in real estate and ive never heard of any of this crap lol.
kustomcreationz
+1y
Wow man they ask you to calculate the IRR ?!?
When do you need it to be done?? I can try to find some time to help you tonight or tomorrow night.
When do you need it to be done?? I can try to find some time to help you tonight or tomorrow night.
SlammedAcroRam
+1y
hey thanks for all the help guys. I ended up figuring it out. I just had to work a lot of overtime at my "part time" job last week and I was behind on the project.