1) The following data, objectives, and constraints have been provided with respect to a proposed venture:
Costs (including transportation costs) $3,900,000
Net leasable area (square feet) 29,500
Financing Specifications:
a. Mortgage loan terms: 9 percent interest; 25 year monthly amortization schedule; renegotiable after 10 years
b. Minimum acceptable current yield on equity funds: 6 percent Operating forecast for first year:
Market rent per square foot (based on analysis of comparable properties) $23.50 Vacancy Rate 9%
Operating expenses, per sq. ft. of leaseable area $9.50
If the minimum acceptable debt coverage ratio is 1.20 and the maximum loan-to-value ratio is 70 percent, what is the maximum total investment (combined equity funds) that will make the above proposal financially feasible?