# Swot Analysis Of Martgage

I base this conclusion on the following calculations:

• The mortgage constant is .085972 calculated using the following HP-12C keystrokes:

F Clx

1 PV

6 g i

20 g n

PMT

12 x

• The percent paid off on the mortgage after 5 years is 15.1004% calculated using the following HP-12C keystrokes:

F Clx

6 g i

20 g n

1 PV

PMT

5 g n

FV

ENTER

1 +

• The sinking fund factor used in this example is .134380 calculated using the following HP-12C keystrokes:

F Clx

1 FV

5 n

20 i

PMT

This information along with the given information is used in the Ellwood formula as follows:

Overall Rate = [.20

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What is the indicated capitalization rate and value of this property if the income was level over the holding period but the property still appreciated 15% in value over the term? Please explain your answer.

The indicated capitalization rate for this property with a level income stream would be 8.58% yielding an estimated value of $6,993,007 rounded to $6,990,000. This is calculated utilizing the same formulas to answer question 1 but with an Ellwood formula denominator of 1 indicating an unchanging income stream. The math would be:

Overall Rate = [.20 - .70 (.20 + (.151004 X .134380) - .085972) - .15 X .134380] / 1

Working the formula results in the following equations:

Overall Rate = [.20 - .70 (.20 + .020292 - .085972) - .020157] / 1

Overall Rate = [.20 - .70 (.13432) - .020157] / 1

Overall Rate = [.20 - .094024 - .020157] / 1

Overall Rate = .085819 / 1

Overall Rate = .085819 Rounded to 8.58%

At this point property value is estimated using the I = R/V formula:

$600,000 = .0858 /