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You are an investor and have the opportunity to purchase a commercial building in a productive business environment.
You are an investor and have the opportunity to purchase a commercial building in a productive business environment. The asking price is $8,000,000 and you are able to secure financing in the form of a 20 year fully amortizing fixed payment mortgage for 75% of the asking price. This mortgage has monthly payments and monthly compounding periods with an annual interest rate of 8% with the entire balance due in 5 years or at the time of sale, whichever occurs sooner.
The building contains 180,000 square feet of leasable space and is situated on a 10 Acre lot. Rent in the area for comparable commercial space is $7.50 per square foot. Land prices in the area for lots in the 10 Acre range are $100,000 per acre. In addition, the following information and assumptions are available to aid your analysis:
