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
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
Please note there are 2 parts to this assignment. Please print out and provide solutions on original
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
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?
b) Assuming the deposit earned a 5 percent rate of interest compounded monthly, how much would he
have at the end of seven years?
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?
Suppose that the borrower will make monthly payments that earn 4 percent interest, compounded
b.) What will the monthly payments have to be?
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?
4. What is the annual debt service on a $900,000, 30-year mortgage at 5.25% interest with monthly
5. Find the future value $2,500 deposited per year for 10 years at 3.5% with interest compounded
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?
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?
9. Find the monthly payment on this loan: $315,000, 15 years, 3.50 percent.
10) Find the balance on this loan at the end of nine years: $315,000, 15 years, 3.50 percent. Show all
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
Owner?s Income Statement
Rental income (last year)
Wages and Salaries
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
Less: Allowance for
Effective Gross Income
Wages and Salaries
Net Operating Income
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:
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
Value: (72,000/0.102) = 705882.35
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