Equity multiple for Cash Flow at Stabilization

1. Determine the equity multiple for Cash Flow at Stabilization including Reversion of $886,406, Total Projected Costs of $563,495, and Equity Invested of $112,900.

2. If the Cash Flow at Stabilization including Reversion is $939,359, the Total Project Costs are $545,124, and the Equity Invested is $182,242, what is the cash on cash return (percent)

3. What is the payment for an amortized mortgage with a term of 40 years, annual payments, an interest rate of 0.09, and an original loan principal amount of $298,208?

4. Assume NOI for a property is $163,236 and the Debt-Service Coverage ratio is 1.73. What is the annual debt service?

5. A property has just been rented at an NOI of $500,517 for the first year, and the Capitalizaiton Rate on comparable properties is 0.07.

Solution

1. Determine the Equity Multiple

Equity Multiple Calculation

Formula:
Equity Multiple = Total Cash Flow at Stabilization including Reversion ÷ Equity Invested

Given:

Cash Flow at Stabilization including Reversion = $886,406

Equity Invested = $112,900

Calculation:
Equity Multiple = $886,406 ÷ $112,900 = 7.85

Correct Answer 7.85

Interpretation:
The equity multiple of 7.85 indicates that for every $1 invested in equity, the investor is getting $7.85 back. This reflects a strong return on equity, showing significant profitability on the investment.

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