Unlike residential real estate, commercial real estate’s value is based on the income it produces during the investors holding period. Based on the information below, use the NPV formula to determine if this is a good investment for Henri and Lila.
Scenario: Henri (66) and Lila (58) are looking to purchase the 3Forks restaurant.
They have a current combined income of $2.5 million per year from their current two small retail businesses (there is no outstanding debt on either business) which they bought in 1967 in Austin, Texas which they plan to keep. The price for the current 3Forks property in Tennessee is $2.2 million for the 8,000 square foot property built in 1968.
The property produces $154,000 each year in Net Operating Income (NOI) that is expected to increase by 3% each year over the next 5 years. The bank will make a loan for the restaurant at 60% LTV for 25 years, fully amortized, at 5%. The bank also requires a 1.5% debt service coverage for this type of loan. At the end of the 5-year NPV analysis, the value of the property will be based on the NOI at that time and the same CAP rate as the purchase price. For your NPV formula, the discount rate is the 5% interest rate.
Why Choose Us
We value our clients. For this reason, we ensure that each paper is written carefully as per the instructions provided by the client. Our editing team also checks all the papers to ensure that they have been completed as per the expectations.
Professional Academic Writers
Over the years, our Acme Homework has managed to secure the most qualified, reliable and experienced team of writers. The company has also ensured continued training and development of the team members to ensure that it keep up with the rising Academic Trends.
Our prices are fairly priced in such a way that ensures affordability. Additionally, you can get a free price quotation by clicking on the "Place Order" button.
We pay strict attention on deadlines. For this reason, we ensure that all papers are submitted earlier, even before the deadline indicated by the customer. For this reason, the client can go through the work and review everything.
At Essay USA, all papers are plagiarism-free as they are written from scratch. We have taken strict measures to ensure that there is no similarity on all papers and that citations are included as per the standards set.
Customer Support 24/7
Our support team is readily available to provide any guidance/help on our platform at any time of the day/night. Feel free to contact us via the Chat window or support email: email@example.com.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
Essay USA has stood as the world’s leading custom essay writing services providers. Once you enter all the details in the order form under the place order button, the rest is up to us.
At Essay USA, we prioritize on all aspects that bring about a good grade such as impeccable grammar, proper structure, zero-plagiarism and conformance to guidelines. Our experienced team of writers will help you completed your essays and other assignments.
Admission and Business Papers
Be assured that you’ll definitely get accepted to the Master’s level program at any university once you enter all the details in the order form. We won’t leave you here; we will also help you secure a good position in your aspired workplace by creating an outstanding resume or portfolio once you place an order.
Editing and Proofreading
Our skilled editing and writing team will help you restructure you paper, paraphrase, correct grammar and replace plagiarized sections on your paper just on time. The service is geared toward eliminating any mistakes and rather enhancing better quality.
We have writers in almost all fields including the most technical fields. You don’t have to worry about the complexity of your paper. Simply enter as much details as possible in the place order section.