College of Administrative and Financial Sciences
Real estate Finance (FIN414)
Deadline: (7/05/2022 @ 23:59 PM)
Course Name: Real estate Finance
Course Code: FIN414
Student’s ID Number:
Academic Year: 1443/1444 H, 2nd Semester
For Instructor’s Use only:
Students’ Grade: /10
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
This assignment is an individual assignment.
The Assignment must be submitted only in WORD format via the allocated
folder on Blackboard.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented. This also
includes filling in your information on the cover page.
Students must mention the question number clearly in their answers.
Late submitted assignments will NOT be entertained.
Avoid plagiarism, the work should be in your own words, copying from
students or other resources without proper referencing will result in ZERO
marks. No exceptions.
All answers must be typed using Times New Roman (size 12, double-spaced)
font. No pictures containing text will be accepted and will be considered
Submissions without this cover page will NOT be accepted.
(Reference Chapters 11,12, & 13)
Question 1. If the value of the property is USD 1 Million, Value allocated to the building is
90%, 10% to land, Loan- to-value is 80%, Interest Rate is 8%, and loan duration is 30 years,
Calculate the following
A. Debt Service, Equity Dividend, Equity Dividend Rate, and Debt Coverage Ratio
B. Explain the motivating factors of investing in the Income properties. [2Marks]
Question 2. What is financial Leverage? Distinguish between Positive & Negative financial
leverage. Also explain the concept of Alternative Financing Structures.
Question 3. What are the different types of risks involved in real estate industry? Explain
any three types of the risks in detail.
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