If a potential investor estimates the market value of an industrial park to be $10,000,000 and can obtain a loan with the following terms: loan to value of 75%, interest rate of 11%, and 20 years with 3 discount points. The estimated remaining discount expense that can be taken as a tax deduction as a result of a sale after a 7 year holding period is
1) $11,250
2) $78,750
3) $146,250
4) $225,000
5) none of the above.
Also
Calculate the gross income multiplier for the following investment.
Effective gross income: $49,500
Before-tax cash flow: $11,440
Acquisition price: $520,000
Equity: 20%
1) 9.5%
2) 8.75%
3) 10.6%
4) 11.25%