1. What is the Net Operating Income for the following duplex investment? Gross I
ID: 2809475 • Letter: 1
Question
1. What is the Net Operating Income for the following duplex investment?
Gross Income $28,400
Vacancy $2,840
Operating Expenses $13,824
Insert answer here __________________
2. Based on answer 1 o above, what is the VALUE of the duplex using a 6% cap rate?
Insert answer here __________________
3.Assume you borrowed $35,000 to buy Yocum Street. The interest rate is 3.75%, the term is 30 years and the amortization are 30 years. What is the monthly mortgage payment?
Explanation / Answer
1: NOI = Gross Income- Vacancy – Operating expenses
= 28400-2840-13824
=$11736
2: Value = NOI/ Cap rate
= 11736/6%
=$195600
3:PV= $35000
Rate = 3.75%/12 =0.003125
N = 30*12= 360
Monthly payment can be computed using PV of annuity formula
PV= P*(1-1/(1+r)^n)/r
35000 = P*(1-1/1.003125^360)/ 0.003125
P= 35000/ ((1-1/1.003125^360)/ 0.003125) = $162.09
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