HRTM 421 Final Ayres (With complete solution)

Principal correct answers The amount of money borrowed debt service correct answers fixed payments to the bank interest rate correct answers percentage of the loan balance amortization rate correct answers number of years the debt service payment is based on amount of principal a bank will lend is based on: correct answers -cash flow projections -present value of the business -loan to value ratio -loan to cost ratio -debt service coverage ratio carried interest correct answers Ownership percentage with no equity investment Promoted Interest correct answers Ownership awarded after equity investors achieve their hurdle rate Equity Kicker correct answers percentage of profit on sale of the asset Executive Summary correct answers brief recap of the project stating: -how much capital is needed -why the request should be approved -major operational and financial benefits of the deal fact sheet correct answers one page description of the key components of the project, should succinctly answer the basic questions the reader wants answers to with regard to the project business plan correct answers summary of the full business plan describing what the project is all about, how the borrower is going to make it successful sources correct answers when and from whom the capital is coming from uses correct answers how and when the borrower intends to spend the money photos or renderings correct answers preliminary architectural or interior design plans third party confirmation correct answers report from a consulting firm affirming the feasibility of the project, could be a market study or appraisal personal financial data correct answers required where the lender requires the loan to be guaranteed