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Answered: - Can I have help with Part One of the attached document. The


Can I have help with Part One of the attached document. ?The course is Finance 311 (Introduction to Real Estate). ?I need help figuring out the necessary TMV functions. ?Thank You?


Name: ___Tyler Murphy

 


 

651904668_____________________________

 


 

Assignment #2 - Due Thursday, March 17th by 8:20am. No late or emailed assignments will be

 

accepted. This assignment is designed to help you become more accustomed to your financial

 

calculator.

 

Please note there are 2 parts to this assignment. Please print out and provide solutions on original

 

assignment.

 

Multiple pages must be stapled in order for the assignment to be turned in. Assignment will not

 

be accepted if not stapled.

 

Part I. Please provide the inputs and solutions for the following. (For PART 1; NO FORMULAS

 

? USE YOUR TVM OPERATIONS ON YOUR CALCULATOR). Points will be deducted for

 

formulas.

 

1) Joe makes a deposit of $9,000 in a bank account. The deposit is to earn interest annually at the rate of

 

5 percent for six years.

 

a) How much will Joe have on deposit at the end of six years?

 

N=

 

PV =

 

I=

 

PMT =

 

FV=

 

b) Assuming the deposit earned a 5 percent rate of interest compounded monthly, how much would he

 

have at the end of seven years?

 

N=

 

I=

 

FV=

 


 

PV =

 

PMT =

 


 

2) You need to save $28,000 in 8 years from today. You want to make annual payments at the end of

 

each year into a sinking fund that will earn interest at an annual rate of 4 percent compounded annually.

 

a.) What will the annual payments have to be?

 

N=

 

PV =

 

I=

 

PMT =

 

FV=

 

Suppose that the borrower will make monthly payments that earn 4 percent interest, compounded

 

monthly.

 

b.) What will the monthly payments have to be?

 

N=

 

PV =

 

I=

 

PMT =

 

FV=

 

3.) You currently owe $62,300 on a home mortgage loan at 4.5 percent interest. If you make monthly

 

payments of $851.28 per month, how long will it take you to fully repay the loan?

 

N=

 

PV =

 

I=

 

PMT =

 

FV=

 


 

4. What is the annual debt service on a $900,000, 30-year mortgage at 5.25% interest with monthly

 

payments?

 

N=

 

PV =

 

I=

 

PMT =

 

FV=

 

5. Find the future value $2,500 deposited per year for 10 years at 3.5% with interest compounded

 

annually.

 

N=

 

PV =

 

I=

 

PMT =

 

FV=

 

6. An investor wants to save for five years for a down payment on a house. She deposits $400 per month

 

into a savings account paying 5% compounded monthly. At the end of the five years, she places the

 

balance of the savings account as a down payment on a house costing $122,000.00. What will her

 

monthly house payments be if she finances it for 30 years at 4.25%? Hint: two steps. Show all inputs.

 


 

7. Natalie can afford to make a mortgage payment of $950 a month, the going interest rates for people in

 

his situation is 3.75% and he would finance the house for 25 years. How much house can Bob afford?

 

N=

 

PV =

 

I=

 

PMT =

 

FV=

 

8. Considering a 30 year mortgage with an interest rate of 5.25%, and the purchase price of the property

 

is $187,300 what are the monthly payments?

 

N=

 

PV =

 

I=

 

PMT =

 

FV=

 

9. Find the monthly payment on this loan: $315,000, 15 years, 3.50 percent.

 

N=

 

PV =

 

I=

 

PMT =

 

FV=

 


 

10) Find the balance on this loan at the end of nine years: $315,000, 15 years, 3.50 percent. Show all

 

inputs.

 


 

Proceed to next part.

 

Part II. Please staple to Part I of the assignment. NO PARTIAL CREDIT ? ONLY FINAL

 

ANSWER WILL BE GRADED.

 

1. Given the following owner?s income and expense estimates for an apartment complex, formulate a

 

reconstructed operating statement. The building consists of 250 units that could rent for $550 per

 

month each.

 

Owner?s Income Statement

 

Rental income (last year)

 

$1,350,000

 

Less: Expenses

 

Utilities

 

$93,20

 

0

 

Supplies

 

33,500

 

Wages and Salaries

 

80,000

 

Maintenance

 

116,000

 

Property Taxes

 

95,300

 

Reserves

 

25,000

 

Depreciation

 

142,00

 

0

 

Insurance

 

24,500

 

Mortgage payments

 

409,00 1,018,500

 

0

 

Net income

 

$331,500

 

Estimating vacancy and collection losses at 5 percent of potential gross income, reconstruct the operating

 

statement to obtain an estimate of NOI. Remember, there may be items in the owner?s statement that should

 

not be included in the reconstructed operating statement. Using the NOI and a Ro of 10.6 percent,

 

calculate the property?s indicated market value. Round your answer to the nearest $1000.

 

NOTE: Please use the included table on the following page to reconstruct the operating statement.

 


 

Reconstructed Operating Statement

 

Rental Income

 

1,650,000

 

Less: Allowance for

 

Vacancy (5%)

 

Effective Gross Income

 


 

82,500

 

1,567,500

 


 

Operating Expenses

 

Utilities

 


 

93,200

 


 

Supplies

 


 

33,500

 


 

Wages and Salaries

 


 

80,000

 


 

Maintenance

 


 

116,000

 


 

Property Taxes

 


 

95,300

 


 

Reserves

 


 

25,000

 


 

Insurance

 


 

24,500

 


 

Net Operating Income

 


 

1,100,000

 


 

Solution: ___(1,100,000/.106) = $10,377,000________________________ (5 Points)

 

2. You have been asked to estimate the market value of an apartment complex that is producing

 

annual net operating income of $72,000. Four highly similar and competitive apartment

 

properties within two blocks of the subject property have sold in the past three months. All

 

four offer essentially the same amenities and services as the subject. All were open-market

 

transactions with similar terms of sale. All were financed with 30-year fixed-rate mortgages

 

using 70 percent debt and 30 percent equity. The sale prices and estimated first-year net

 

operating incomes were as follows:

 

Comparable 1:

 

Comparable 2:

 

Comparable 3:

 

Comparable 4:

 


 

Sale price $408,000; NOI $41,600

 

Sale price $399,900; NOI $43,100

 

Sale price $411,000; NOI $39,800

 

Sale price $421,000; NOI $42,600

 


 

Hint: PLEASE ROUND TO THREE (3) DECIMAL PLACES.

 


 

What is the estimate value of the property using direct capitalization? Please

 

round your final answer to the nearest $1000.

 

(5 points) No partial points

 

Comparable

 

1

 

2

 

3

 

4

 


 

NOI

 

41,600

 

43,100

 

39,800

 

42,600

 


 

Sale Price

 

408,000

 

399,900

 

411,000

 

421,000

 

Average

 


 

Value: (72,000/0.102) = 705882.35

 


 

Solution: ____$706,000.00_______________________

 


 

Ro

 

.102

 

.108

 

.097

 

.101

 

.102

 


 

 

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