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homework_assignment_2.xlsx
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Property A&B

Property A Property B
Purchase Information Purchase Information
Purchase Price $ 350,000.00 Purchase Price $ 350,000.00
Loan‐to‐Value Ratio 75% Loan‐to‐Value Ratio 75%
Loan Amount $ 262,500.00 Loan Amount $ 262,500.00
Existing Loan Existing Loan
Original Loan Amount $ 200,000.00 Original Loan Amount $ 250,000.00
Interest Rate 5.00% Interest Rate 5.25%
Term 25 years Term 25 years
Number of Years Since Loan Began 10 years Number of Years Since Loan Began 10 years
Second Mortgage Second Mortgage
Interest Rate 8.00% Interest Rate 8.00%
Term 15 years Term 15 years
New First Mortgage New First Mortgage
Interest Rate 6.75% Interest Rate 6.75%
Term 15 years Term 15 years
Solution Solution
Compute Monthly Payment for the Existing Loan Compute Monthly Payment for the Existing Loan
N 300 N 300
I 0.42% I 0.44%
PV -$ 200,000.00 PV -$ 250,000.00
PTM ??? $1,169.18 PTM ??? $1,498.12
FV 0 FV 0
Compute Balance for the Existing Mortgage Compute Balance for the Existing Mortgage
N 180 N 180
I 0.42% I 0.44%
PV ??? -$147,848.95 PV ??? -$186,361.59
PTM $1,169.18 PTM $1,498.12
FV 0 FV 0
Compute the Loan Amount Needed for Second Mortgage Compute the Loan Amount Needed for Second Mortgage
Total loan Required $ 262,500.00 Total loan Required $ 262,500.00
Blance Existing -$147,848.95 Blance Existing -$186,361.59
2nd Loan Amont $ 114,651.05 2nd Loan Amont $ 76,138.41
Compute Monthly Payment for the Second Mortgage Compute Monthly Payment for the Second Mortgage
N 180 N 180
I 0.0066666667 I 0.0066666667
PV -$ 114,651.05 PV -$ 76,138.41
PTM ??? $1,095.67 PTM ??? $727.62
FV 0 FV 0
Compute Total Monthly Payment Compute Total Monthly Payment
Existing Loan $1,169.18 Existing Loan $1,498.12
Second Mortgage $1,095.67 Second Mortgage $727.62
Total Monthly Payment $2,264.85 Total Monthly Payment $2,225.74
Compute the Effective Cost of Assuming Loan and Adding Second Mortgage Compute the Effective Cost of Assuming Loan and Adding Second Mortgage
N 180 N 180
I ??? 0.53% monthly I ??? 0.51% monthly
PV -$ 262,500.00 or PV -$ 262,500.00 or
PTM $2,264.85 6.35% annual PTM $2,225.74 6.07% annual
FV 0 FV 0
Compare this Cost to the Interest Rate for the New First Mortgage Compare this Cost to the Interest Rate for the New First Mortgage
6.35% 6.07%
vs. vs.
6.75% 6.75%

Property C&D

Property C Property D
Purchase price 475000 Purchase Information
Loan to Value 80% Purchase Price $ 445,000.00
Seller Financing Loan‐to‐Value Ratio 80%
Loan Amount $ 380,000.00 Loan amount $ 356,000.00
Interest Rate 3.75% Mortgage Available from Market
Term 30 years Interest Rate 4.50%
Mortgage Available from Market Term 30 years
Interest Rate 4.50%
Term 30 years
solution
Compute Monthly Payment for the Seller Financing
N 360
I 0.31%
PV -$ 380,000.00
PTM ??? $1,759.84
FV 0
Compute the Cash Equivalent Value of the Seller Financing
Discount the payments using market interest rate.
N 360
I 0.3750%
PV ??? -$347,323.91
PTM $1,759.84
FV 0
Compute the Premium for the Favorable Financing
Loan Amont $ 380,000.00
Cash Eq Value -$347,323.91
Financing Premium $ 32,676.09

Property E&F

Property E
Year 0 1 2 3 4 5
NOI $ 124,568.00 $ 274,488.00 $ 256,793.00 $ 328,920.00 $ 358,392.00
sale $ 3,560,468.00
total cash flow -$ 1,750,000.00 $ 124,568.00 $ 274,488.00 $ 256,793.00 $ 328,920.00 $ 3,918,860.00
IRR 26.25%
Property F
Year 0 1 2 3 4 5
NOI $ 234,567.00 $ 345,789.00 $ 275,356.00 $ 354,682.00 $ 258,324.00
Sale $ 2,575,668.00
Totao Cash Flow -$ 1,550,000.00 $ 234,567.00 $ 345,789.00 $ 275,356.00 $ 354,682.00 $ 2,833,992.00
IRR 26.52%

Property G&H

Property G
Year 1 2 3 4 5
$ 60,000.00 $ 85,000.00 $ 75,000.00 $ 74,000.00 $ 73,000.00
sale $ 1,250,000.00
total cash flow $ 60,000.00 $ 85,000.00 $ 75,000.00 $ 74,000.00 $ 1,323,000.00
rate 6% rate 8%
NPV $1,242,462.41 NPV $1,142,770.55
Property H
Year 1 2 3 4 5
$ 20,000.00 $ 35,000.00 $ 40,000.00 $ 35,000.00 $ 20,000.00
sale $ 1,500,000.00
total cash flow $ 20,000.00 $ 35,000.00 $ 40,000.00 $ 35,000.00 $ 1,520,000.00
rate 6% rate 8%
NPV $1,247,158.27 NPV $1,140,491.17