please explain 25. Given the following information, calculate the funds from ope

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please explain

25. Given the following information, calculate the funds from operation (FFO). Net income: $1,200,000, Gain/losses from infrequent and unusual events: $0, Amortization of tenant improvements: $120,000, Amortization of leasing expenses: $75,000, Depreciation (real property): $2,675,000.
A. $195,000
B. $1,395,000
C. $2,870,000
D. $4,070,000

16. Given the following information, calculate the estimated terminal value of the property at the end of its holding period. Going-out cap rate: 9%, Estimated holding period: 5 years, NOI for year 5: $100,500, NOI for year 6: $102,000.
A. $1,113,333
B. $1,116,667
C. $1,133,333
D. $1,166,667

17. Given the following information, calculate the before-tax equity reversion (BTER). NOI: $89,100, Annual Debt Service: $58,444, Net Sale Proceeds: $974,700, Remaining Mortgage Balance: $631,026.
A. $30,656
B. $343,674
C. $572,582
D. $885,600

18. Given the following information, calculate the appropriate after-tax discount rate. Tax rate on comparable risk investment: 35%, Investor's before-tax opportunity cost: 12%, Capitalization rate: 8%.
A. 2.8%
B. 4.2%
C. 5.2%
D. 7.8%

19. Given the following information, calculate the going-out cap rate. Estimated holding period: 5 years, NOI for year 1: $120,000, NOI for year 5: $150,000, NOI for year 6: $155,250, Expected sale price: $1,350,000.
A. 8.9%
B. 11.1%
C. 11.5%
D. 11.9%

20. Given the following information, calculate the NPV for this property. Initial cash outflow: $200,000, Discount rate: 15%, CF for year 1: $25,876, CF for year 2: $23,998, CF for year 3: $23,013, CF for year 4: $22,105, CF for year 5: $144,670.
A. -$51,875
B. -$59,657
C. $140,343
D. $295,951

Explanation / Answer

25. Net income 1200000
Gain loss   0
Amortiztion of tenant improvement 120000
amortization of legal exp 75000
Depreciation 2675000

Funds from operations= Net income - Interest income + Interest expense + Depreciation
- Gains on asset sales + Losses on asset sales
Funds from Operations = Net Income + Depreciation + Amortization - Gains on Sales of Property
                                              =120000+2675000+120000+75000
                                              =4070000
Answer is D

17 before-tax equity reversion = 974700-631026
                                                         = 343674 Answer is B

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