A lender is willing to provide a loan equal to 80% of a property worth $360,000. If such a loan carries an interest rate of 7.5%

Question

3 years ago

12

A lender is willing to provide a loan equal to 80% of a property worth $360,000. If such a loan carries an interest rate of 7.5%

for a term of 20 years, what is the projected before-tax cash flow? The NOI is $40,000 per year. The 7.5% 20-year annual loan payment factor is .09809. Multiply the OLB by this factor to obtain the annual mortgage payment.a. $11,000b. $11,750c. $15,615d. $28,024

Business

1 answer:

lukranit [14] · Answer 1 · 2022-05-18T20:24:32+03:00

Answer:

B) $11,750

Explanation:

annual mortgage payment = net operating income - (outstanding loan balance x loan payment factor)

outstanding loan balance = property value x loan percentage

annual mortgage payment = $40,000 - [($360,000 x 80%) x 0.09809] = $40,000 - ($288,000 x 0.09809) = $40,000 - $28,250 = $11,750