what is the projected cost of the equity participation financing?

1) Chapter 51. A price level adjusted mortgage (PLAM) is made with the following terms:Amount = $95000Initial interest rate = 4 percentTerm = 30 yearsPoints = 6 percentPayments to be reset at the beginning of each year.Assuming inflation is expected to increase at the rate of 6 percent per year for thenext five years:a. compute the payment at the beginning of each year (BOY)b. what is the loan balance at the end of the fifth year?c. what is the yield to the lender on such a mortgage?2. A basic Arm is made for $200,000 at an initial interest rate of 6 percent for 30years with an annual reset date. the borrower believes that the interest rate atthe beginning of year (BOY) 2 will increase to 7 percent.a. assuming that a fully amortizing loan is made, what will the monthly payments beduring year 1?b. Based on a what will the loan balance be at the end of the year (EOY)1?c. Given that the interest rate is expected to be 7 percent at the beginning of year 2what will the monthly payments be during year 2d. What will be the loan balance at the EOY2?e. What would be the monthly payments in year 1 if they are to be interest only?2) Chapter 121. And investor would like to purchase a new apartment property for $2 million.however, she faces the decision of where to use 70 percent or 80 percentfinancing. the 70 percent loan can be obtained at 10 percent interest for 25 years.the 80 percent loan can be obtained at 11 percent interest for 25 years.NOI is expected to be 190,0000 per year and increase at 3 percent annually, the samerate at which the property is expected to increase in value. The building andimprovements represent 80 percent of value and will be depreciated over (1/27.5 peryear) the project is expected to be sold after five years. assume a 36 percent taxbracket for all income and capital gains taxes.a) What would the BTIRR and ATIRR be at each level of financing (assumemonthly mortgage amortization)?b) What is the breakeven interest rate (BEIR) for this project?c) What is the marginal cost of the 80 percent loan? what does this mean?d) Does each loan offer favorable financing leverage? which would yourecommend?2. You are advising a group of investors who are considering the purchase of a shoppingcenter complex they would like to finance 75 percent of the purchase price. a loan hasbeen offered to them on the following terms: the contract interest rate is 10 percentand will be amortized with monthly payment over 25 years. the loan also will have anequity participation of 40 percent of the dash flow after debt service. the loan has alockout provision that prevents it from being prepaid before year 5.The property is expected to cos t $5 million. NOI is estimated to be $475000 including overages,during the first year, and to increase the rate of 3 percent per year for the next five years. theproperty is expected to be worth $6 million at the end of five year. The improvement represents80 percent of cost, and depreciation will be over 39 years. assume a 28 percent tax bracket for allincome and capital gains and a holding period of five years.a. Compute the BTIRR and ATTIRR after five years, taking into account the equityparticipation.b. What would the BEIR be on such a project? what is the projected cost of the equity participation financing?c. Is there favorable leverage with the proposed loan?