WACC. Eric has another get-rich-quick idea, but needs funding to support it. He chooses an all-debt funding scenario. He will borrow $4,960 from Wendy, who will charge him 7% on the loan. He will also borrow $4,613 from Bebe, who will charge him 9% on the loan, and $2,427 from Shelly, who will charge him 15% on the loan. What is the weighted average cost of capital for Eric? ... What is the weighted average cost of capital for Eric? 10.33% (Round to two decimal places.)
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- WACC. Eric has another get-rich-quick idea, but needs funding to support it. He chooses an all-debt funding scenario. He will borrow $3,416 from Wendy, who will charge him 5% on the loan. He will also borrow $2,541 from Bebe, who will charge him 7% on the loan, and $1,043 from Shelly, who will charge him 13% on the loan. What is the weighted average cost of capital for Eric? What is the weighted average cost of capital for Eric? (Round to two decimal places.)This is a Debt Coverage Ratio or DCR question for part a and a CAP rate question for part b]. Wendy is going to purchase a commercial building and is working with a commercial lender at her local bank. The bank has some loan parameters that Wendy must follow. Understanding the rules will allow her to calculate her cash, income, and payment projections. The bank requires a 1.4 debt coverage ratio for her project. Wendy needs to calculate her net operating income or NOI first. The debt coverage ratio is based on this number. Then she will apply for a 20 year loan at 5% with annual payments. Information on the property includes: Gross rents- $780,000 Vacancy 5% Salaries $85,000 Other Fixed Expenses $125,000 Variable Expenses 20% of gross rents. NOI=_________________ Use the NOI and Debt Coverage requirement to calculate the answer. What is the largest annual payment the bank will allow? If Wendy had to buy the property at a 6% CAP (capitalization) rate, what is the asking price?usingTVM formulas. Aya and Sakura would like to buy a house and their dream home costs $500,000. Their goal is then to save $50,000 for a down payment and then would take out a mortgage loan for the rest. They plan to put their monthly saved amount in a conservative mutual fund that has a track record of a 4.25% rate of return. To be sure they don't go spending this money on other things, they are going to move it into their investment account at the beginning of each month. Their hope is to be able to buy this home in 7 years. What would their monthly savings amount have to be to reach this goal? What will be the total interest earned?
- (Solving for r with annuities) Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent, who believes that Nicki is an older woman ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her an annual fixed income. The annuities are as follows in the popup window: LOADING... . If Nicki could earn 11 percent on her money by placing it in a savings account, should she place it instead in any of the annuities? Which ones, if any? Why? a. What rate of return could Nicki earn on her money if she place it in annuity A with $7,000 payment per year and 10 years duration? nothing% (Round to two decimal places.) Help Me Solve ThisView an Example Get More Help Clear All Check Answer Data Table ANNUITY INITIAL PAYMENT INTO ANNUITY (AT t = 0) AMOUNT OF MONEY RECEIVED PER YEAR DURATION OF ANNUITY (YEARS) A $40,000…The minimum down payment to obtain the best financing rate on a house is 20%. Assuming that John has set aside $27,000, and wants to take advantage of the best financing rate, what is the most expensive house he can purchase?please use ms word not excel. (real state finance) 1. Jim has an annual income of $225,000. Apple bank has a maximum front end DTI limit of 28%, what is the most they will allow Jim to spend on monthly principal, interest, taxes and insurance? 2. Jim has an annual income of $225,000. Jim is looking to buy a house with monthly property taxes of $700 and monthly homeowner’s insurance of $300. Apple bank has a maximum front end DTI limit of 28%, what is the most they will allow Jim to spend on a monthly mortgage? 3. Jim has an annual income of $225,000. Jim is looking to buy a house with monthly property taxes of $700 and monthly homeowner’s insurance of $300. Jim has $625 in monthly student loan payments. Apple bank has a maximum back end DTI limit of 36%. Given the back end DTI constraint, what is the most they will allow Jim to spend on a monthly mortgage payment?
- Aya and Sakura would like to buy a house and their dream home costs $500,000. Their goal is then to save $50,000 for a down payment and then would take out a mortgage loan for the rest. They plan to put their monthly saved amount in a conservative mutual fund that has a track record of a 4.25% rate of return. To be sure they don’t go spending this money on other things, they are going to move it into their investment account at the beginning of each month. Their hope is to be able to buy this home in 7 years. What would their monthly savings amount have to be to reach this goal? What will be the total interest earned?6. Suppose Hassan decides to explore the costs of financing a more expensive vehicle. The more expensive vehicle costs $34,900 in total and qualifies for the 3.9% dealer financing for 48 months or $2500 cash back. What is the highest effective annual rate of interest at which Hassan should borrow from the bank instead of using the dealer's 3.9% financing? Hassan's wife Dana also needs a car. While reading the newspaper, she notices an ad for an Acura TSX She thinks that it is her ideal vehicle. The ad quotes both a cash purchase price of $37,500 and a monthly lease payment option. Since she does not have enough money to pay cash for a car, she would have to finance it from Honda by paying interest of 5.9% compounded monthly on a loan. The lease option requires payments of $594 a month for 48 months with a $1,330 down payment or equivalent trade. Freight and air tax are included. Dana does not have a vehicle to offer as a trade-in. If the vehicle is leased, then after 48 months it could…(Solving for r with annuities) Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent, who believes that Nicki is an older woman ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her an annual fixed income. The annuities are as follows If Nicki could earn 11 percent on her money by placing it in a savings account, should she place it instead in any of the annuities? Which ones, if any? Why? a. What rate of return could Nicki earn on her money if she place it in annuity A with $6500 payment per year and 16 years duration?
- The Hentys are considering buying a house and are researching the potential costs. Their adjusted gross income is $130,500. The monthly mortgage payment for the house they want would be $1,400. The annual property taxes would be $10,400. The homeowner’s annual insurance premium is $975. Will the bank lend them the money to purchase the house? Use a threshold of 28% front end ratio of monthly housing expenses to monthly gross income. YES- (21.6%)Tom and Kyra Courtney are considering buying a house and are researching the potential costs. Their adjusted gross income is $144,000. The monthly mortgage payment for the house they want would be $1,450. The annual property taxes would be $9,400, and the homeowner’s insurance premium would cost them $876 per year. What is the front end ratio and will they be able to qualify?Aya and Sakura would like to buy a house and their dream home costs $500,000. Their goal is then to save $50,000 for a down payment and then would take out a mortgage loan for the rest. They plan to put their monthly saved amount in a conservative mutual fund that has a track record of a 4.25% rate of return, compounded quarterly. To be sure they don’t go spending this money on other things, they are going to move it into their investment account at the beginning of each month. Their hope is to be able to buy this home in 7 years. Aya and Sakura have now saved up their down payment to buy a home, but they still need to borrow to cover the rest. For the home they want this will require a mortgage of $450,000 to cover the remaining amount and they’re not sure whether they could afford the monthly loan payments. The bank has offered them a mortgage interest rate of 5.15%, compounded semi-annually. how much would they have to be able to afford to pay each month in order to pay off…