Investment analysis and taxation of income properties

Investment Analysis and Taxation of Income Properties

1. A property produces a first year NOI of $100,000 which is expected to grow by 2% per year. If the property is expected to be sold in year 10, what is the expected sale price based on a terminal capitalization rate of 9.5% applied to the eleventh year NOI? (B) (A) $1,308,815 (B) $1,283,152(C) $1,263,158(D) $1,257,992
2. A property that produces a first year NOI of $80,000 is purchased for $750,000. The NOI is expected to increase by 15% in the sixth year when some of the leases turnover. The resale price in year 10 is expected to be $830,000. What is the net present value of the property based on the 10-year holding period and a discount rate of 9.5%? (D) (A) $87,433(B) $87,221(C) $95,294(D) $116,490
3. A property is purchase for $15 million. Financing is obtained at a 75% loan-to-value ration with total annual payments of $1,179,000. The property produces an NOI of $1,400,000. What is the equity dividend rate (ratio of first year cash flow to equity)? (A) (A) 5.89%(B) 9.33%(C) 7.86%(D) 8.64%
4. A property that produces a level of NOI of $200,000 per year is expected to be sold in year 5 for $2,000,000. If the property was purchased for $2,000,000, what percent of the IRR can be attributed to the operating income only? (C) (A) 10.0%(B) 90.0%(C) 37.9%(D) 63.1%
5. A property that produces an annual NOI of $100,000 was purchased for $1,200,000. Debt service for the year was $95,000 of which $93,400 was interest and the remainder was principal. Annual depreciation is $38,095. What is the taxable income? (C) (A) $5,000(B) $6,600(C) – $31,495(D) – $33,095