(Solution) 14 14. Suppose An Investor Is Considering A Non-residential Rental Property That Has An Asking Price Of $400,000. The Land Is Valued At $175,000. | Snapessays.com


(Solution) 14 14. Suppose an investor is considering a non-residential rental property that has an asking price of $400,000. The land is valued at $175,000.


14 14. Suppose an investor is considering a non-residential rental property that has an asking price of $400,000. The land is valued at $175,000. The property has four rental units that are expected to rent for $1,200 each per month for the next five years (PGI each year of $57,600). Vacancy and bad debt allowance is expected to be 5% of potential gross income. Operating expenses are expected to be 16% of effective gross income. A mortgage loan is available for 80% of the purchase price at 8% annual interest with annual payments over 25 years. The investor faces a 28% tax rate and expects to buy this property on January 1, keep it for 5 years (through December 31 five years later, then sell it for $400,000 (less 5% selling expenses). What is the expected BTCF for each year of the investment holding period? BTER? a $400,000 b $380,000 c $294,321 d $85,679

 


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This question was answered on: May 23, 2022

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