URGENT - Can someone help answer this question about which loan to choose?

kasa4321's picture
Rank: Monkey | 42

** Now that you have selected the hotel you want to invest in, you must decide between two lenders**

** LENDER SA** ** LENDER BH**

Profile: Local Bank/Balance Sheet Loan CMBS
Rate: 4.5% 4.0%
Term: 5 Years 10 years
Amortization: 30 Years 25 Years
Proceeds: 70% LTV 75% LTV
1. How much is each lender providing to you in total proceeds? Assume the purchase price equates
to value.
2. What is the loan payment?
3. Which lender would you choose? Why?

Comments (10)

Funniest
Jan 17, 2020

I cant wait for someone with something to prove to jump in here and do this dudes homework.

    • 12
Jan 17, 2020

That person should refuse just based on the awful formatting

If you're going to copy and paste a homework assignment, at least make sure the formatting transfers

Jan 17, 2020

I can answer this in about 5 seconds:
1) you can't determine loan proceeds because he doesn't give a value
2) cant determine payment because you dont know loan amt
3) you can't determine because you know literally nothing about this hotel

    • 1
    • 1
Jan 17, 2020

Given the current economic environment and probability of recession, I would choose to purchase the hotel un-leveraged to reduce my risk.

    • 1
Jan 17, 2020

Max proceeds baby!

    • 2
Jan 17, 2020

Determine your cost of capital for each loan.

Jan 17, 2020

I would choose the second option because it sounds more prestigious

    • 3
Jan 18, 2020

DAVE RAMSEY says don't take out debt

    • 4
Jan 21, 2020
Comment

Robert Clayton Dean: What is happening?
Brill: I blew up the building.
Robert Clayton Dean: Why?
Brill: Because you made a phone call.

    • 1