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1. You are borrowing $185,000 to purchase your new home. The
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  1. 1. You are borrowing $185,000 to purchase your new home. The mortgage offers a 5% fixed annual rate of interest and the balance is amortized over a 30-year period. You do not have to pay any points or origiantion fees, but a penalty equal to 3% of the remaining loan balance is charged if the loan is repaid in full at any time within the first five years.


 What is the remaining balance of the loan after making payments for three years?


What is the total amount that must be to the lender if you pay off the remaining balance of the loan after making payments for three years?


 If you pay off the remaining balance of the loan after making payments for three years, what is the effective cost of borrowing?


  1. 2. You are financing the acquisition of a small office building with a 5-year commercial loan with 6% annual interest rate and a 20-year amortization period. A. If the amount borrowed is $1,250,000 and payments are made on a monthly basis, what is the montly payment?


What is the balloon payment that is due when the loan matures?


If you must pay an origination fee of $60,000 to the lender at the time you receive the loan, what is your effective cost of borrowing? 


  1. 3. The annual reimbursable expenses for a 25,000 square foot building come to $87,500. What is the expense reimbursement for a tenant occupying 10,000 square feet with an expense stop equal to $2.25/sf?


  1. 4. A retail tenant in Hoboken, NJ pays $25/sf plus overage to rent 1250 sf of space. If they earn $825,000 in total sales for the year and pay a percentage rent equal to 5% of chargeable sales as determined by their natural break point, what is the total amount of rent paid? 


  1. 5.If a building offering 45,000 square feet of rentable space is 75% occupied, what is the annual utility expense if utilities are $2.15/sf and 40% fixed?


  1. 6.Note: The information presented here applies to questions 4 and 5. The law firm of Saul Goodman and Associates must choose between two different leases for their new space. The first lease, Lease A, is a 5-year gross lease with a base rent of $36.25/sf. If rents will increase by $1.00/sf each year and the cash flows from the lease are discounted at 6%, what is the corresponding effective rent when evaluated from the tenant's perspective?


  1. 7. The second lease, Lease B, is a 5-year net lease with a base rent of $25/sf with expenses expected to be $10/sf in the first year. If rents will increase by $1.00/sf each year and expenses by 5% a year, what is the corresponding effective rent from the tenant's perspecitive if cash flows are discounted at 6% annually?





 







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