#### Question Details

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?

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PV =

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PMT =

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

have at the end of seven years?

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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?

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

monthly.

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

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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?

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

payments?

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

annually.

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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?

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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?

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

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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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