Hmm 3am real estate item set…if we get tested on that stuff (which is most likely the case given alternatives is 10-15%)…is it going to be that crazy? I know I haven’t reviewed that portion since I’ve last read it (which was months) but it still seemed a bit calculation intensive. Quite franklin, I’m scared…very scared now…
yeah, that section was ridiculous although i seemed to guess my way thru ok (unlike the capital budgeting)… there’s an important errata on at least one question in the vignette. and it isn’t that bad if you go thru the answers… probably won’t be there of course, but a question or two might be.
Yeah that section was brutal…but it is definitely a possibility come Saturday. I think a good portion of what you need to know for calcs can probably be found in that item set.
i still cant figure out how they calculated the interest expense/ debt payment to compute CFAT for that particular question!!! did they pluck that from the sky?
I was quite the happy person yesterday until i saw certain portions of exam 3. What in the world…
I don’t think the real thing will come close to being that hard. That was brutal. I could hardly review it.
ahmadmaghfur Wrote: ------------------------------------------------------- > i still cant figure out how they calculated the > interest expense/ debt payment to compute CFAT for > that particular question!!! did they pluck that > from the sky? It was interest only, so the mortgage repayment was the full 32 million.
Niblita75 Wrote: ------------------------------------------------------- > ahmadmaghfur Wrote: > -------------------------------------------------- > ----- > > i still cant figure out how they calculated the > > interest expense/ debt payment to compute CFAT > for > > that particular question!!! did they pluck that > > from the sky? > > > It was interest only, so the mortgage repayment > was the full 32 million. Well , i spent 10 mins calculating the amortization to separate between interest and principal payment… they shouldve have indicated that only a simple assumptions is needed to compute the interest and debt repayment (32m X 7%). Sigh…
Ya, they said interest only which saves some time. They’d provide an amortization table if we needed it, it’d be too time consuming to calulate, like MACRS depreciation.
I drank another cup of coffee…took a shower to refresh myself…i THINK im ready to review this real estate item set now. Wish me luck. sigh.
If anyone has the rationale for those answers, please post them, b/c I’ve crunched the numbers six ways till Sunday and still can’t get any of those answers.
petey, i can’t post the detailed answers (time and ethics) but it makes pretty good use of that comparable property/company. there’s an errata too. i think the one question is selling for $45 million (40??) instead of $60M.
I just read above…that Interest only thing didn’t register…thats why I didn’t get the answer…i was wondering if they wanted me to use the Amortization table function in my calculator. The build up method, comparables, etc…I got those…it was the CFAT, Equity Reversion, and Tax Liab that got me. For all the $$ we dole out, you’d think they could provide the rationales for these Q’s.
Interest only payments on a mortgage are the loan balance * the rate in decimal for annual payments, divide that by 12 and you have your monthly payment. when calculating sales of real estate you receive the sales price less the balance of the mortgage and if your paying the interest only payment, the ending balance will be exactly the same as original loan amount.
IS there an errata for #32 on this real estate problem…gross income multiplier cannot be a $ figure…huh.