uhm, wtf is this? whos with me on taking the hit on this i cant understand this ish lets burn this fucker down 1time1luv
it is one of the 3 ways to derive the cap rate. you use this w/ property that is financed w/ debt and equity. you take your % of debt and your %equity, to derive the cap rate. the % debt consists of two parts…1-the mgt rate and 2-sinking fund factor… all you have to do is figure out the sinking fund factor… it is a fv of 1 for however amount of months the loan is for… this sinking fund factor gets added to your mgt rate to determine your total rate…just plug all the # and get pmt…thats the rate now once you have the total debt rate and equity rate just to weighted av nd that isyour cap rate
it’s not that bad! basically it’s a method to calculate the Capitalization Rate on real estate investments where it is financed both with equity and a loan the general formula is Cap Rate = (weight of the mortgage x mortgage cost) + (weight of the equity x equity cost) the trick is that the mortgage cost = stated mortgage rate + sinking fund factor to calculate the sinking fund factor use the TVM function (think about it like an annuity) N = nr of years of the mortgage x 12 I/Y = mortgage rate/12 PV=0 FV = -1 compute PMT once you get PMT = multiply by 12 and you get the annual sinking fund factor which you add to the motgage stated rate and obtain the cost of the mortgage
which section does this belong to? absolutely no clues…