real estate
- Thread starter tony2
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thunderanalyst
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- Jun 18, 2026
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48,725 something was ans I think. I couldn't get an answer from choices for the 2 year forward rate question in bonds. Don't what wrong I was doing ?
I got the same thing as you for real estate question... I spent 10 minutes on forward rate cause i had the equation memorized wrong. At the end of the review though, I kinda of had to derived my own equation and finally got the forward rate which was 7.5% or about that range. And after the exam i checked the eqn I used and it was the right one... (i forgot to take the root originally)
The after-tax cash flow problem is:
Find the pre-tax income, then apply the investor's tax rate, finally add back depreciation and subtract the "principal" amount of the payment. (Since the financing payment includes both interest and principal, you will have to subtract both out (but in the case of the interest payment, it's tax-deductible, so you will subtract this piece out prior to applying the tax rate).
Where the pre-tax income is the gross income less vacancy (%), tax (real estate tax), expenses, maintenance, etc. I think i got 42,425? 48,425?
For the forward rate question, you have to take all the BEY spot rates and divide by 2. Now start from there. Since they are asking 2-year forward 1 year from now, just solve it like a 4-period forward 2-period from now, where the periods are now all semiannual. Hope that helps.
Find the pre-tax income, then apply the investor's tax rate, finally add back depreciation and subtract the "principal" amount of the payment. (Since the financing payment includes both interest and principal, you will have to subtract both out (but in the case of the interest payment, it's tax-deductible, so you will subtract this piece out prior to applying the tax rate).
Where the pre-tax income is the gross income less vacancy (%), tax (real estate tax), expenses, maintenance, etc. I think i got 42,425? 48,425?
For the forward rate question, you have to take all the BEY spot rates and divide by 2. Now start from there. Since they are asking 2-year forward 1 year from now, just solve it like a 4-period forward 2-period from now, where the periods are now all semiannual. Hope that helps.
hopetobeat
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- Jun 18, 2026
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7.5% it is.
willispierre
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- Jun 18, 2026
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you just used the BEYs and did this, right? (1+r)^6/(1+r)^2 and then raised this to the 1/4, right?
willispierre
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- Jun 18, 2026
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yep, i agree
thunderanalyst
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- Jun 18, 2026
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adalfu Wrote:
-------------------------------------------------------
> The after-tax cash flow problem is:
>
> Find the pre-tax income, then apply the investor's
> tax rate, finally add back depreciation and
> subtract the "principal" amount of the payment.
> (Since the financing payment includes both
> interest and principal, you will have to subtract
> both out (but in the case of the interest payment,
> it's tax-deductible, so you will subtract this
> piece out prior to applying the tax rate).
>
> Where the pre-tax income is the gross income less
> vacancy (%), tax (real estate tax), expenses,
> maintenance, etc. I think i got 42,425? 48,425?
>
>
> For the forward rate question, you have to take
> all the BEY spot rates and divide by 2. Now start
> from there. Since they are asking 2-year forward
> 1 year from now, just solve it like a 4-period
> forward 2-period from now, where the periods are
> now all semiannual. Hope that helps.
Yes and thats exactly wht I did. I was getting about 4.96 so I marked 6%. I don't k now where I messed it.
One more point gone
-------------------------------------------------------
> The after-tax cash flow problem is:
>
> Find the pre-tax income, then apply the investor's
> tax rate, finally add back depreciation and
> subtract the "principal" amount of the payment.
> (Since the financing payment includes both
> interest and principal, you will have to subtract
> both out (but in the case of the interest payment,
> it's tax-deductible, so you will subtract this
> piece out prior to applying the tax rate).
>
> Where the pre-tax income is the gross income less
> vacancy (%), tax (real estate tax), expenses,
> maintenance, etc. I think i got 42,425? 48,425?
>
>
> For the forward rate question, you have to take
> all the BEY spot rates and divide by 2. Now start
> from there. Since they are asking 2-year forward
> 1 year from now, just solve it like a 4-period
> forward 2-period from now, where the periods are
> now all semiannual. Hope that helps.
Yes and thats exactly wht I did. I was getting about 4.96 so I marked 6%. I don't k now where I messed it.
One more point gone
Yeap those 3....
FRA, Forward rate and Real Estate....
Spent about 5 min on each and could not figure out an answer that was part of the choices. :/
For the Fwd Rate, they couldn't just pick normal rates... they had to do bond-yields.
And for the Real Estate, they had to pick the most complicated method.
FRA, Forward rate and Real Estate....
Spent about 5 min on each and could not figure out an answer that was part of the choices. :/
For the Fwd Rate, they couldn't just pick normal rates... they had to do bond-yields.
And for the Real Estate, they had to pick the most complicated method.