1. Consider a $4,000,000, 7%, 25-year mortgage with monthly payments and a 7-year maturity with a balloon. If the market yield is 7.5% (BEY), how many disbursement discount points must the lender charge to avoid doing a negative NPV deal from a market value perspective?
2. Why is it that construction loans are almost always used to finance all or most of the construction costs in development investment, even when the investor has plenty of cash that could be used to pay for construction?