2012 2013 2014 2015 SALES UNIT FORECASTS Forecasted occupancy 100 00 98 00 96 04 94 12 2 00 Number of beds in complex 36 36 36 36 0 00 Monthly rent per bed $ 497 00 $ 571 55 $ 657 28 $ 755 87 15 00 Sandwich sales per person per month 10 0 14 0 19 6 27 4 40 00 Price of Sandwiches $ 6 00 $ 6 90 $ 7 94 $ 9 13 15 00 Cost of Sandwiches $ 1 50 $ 1 53 $ 1 56 $ 1 59 2 00 RATIOS USED IN FORECAST Average Rent and Sandwich receivables 15 15 3 15 606 15 91812 2 00 Sandwich COGS average payment period 30 30 45 45 Inventory turnover ratio (sandwiches) 50 0 65 0 84 5 109 9 30 00 INCOME STATEMENT Revenues Rent $ 214,704 $ 241,971 $ 272,702 $ 307,335 Sandwiches $ 25,920 $ 40,897 $ 64,527 $ 101,810 Cost of Goods Sold Sanwiches $ 6,480 $ 9,068 $ 12,691 $ 17,760 Operating Expenses General and Administrative $ 10,000 $ 11,756 $ 14,015 $ 17,003 4 16 Apartment Maintenance Service $ 15,000 $ 16,905 $ 19,052 $ 21,472 6 99 Marketing $ 1,000 $ 1,000 $ 1,000 $ 1,000 Utilities $ 10,000 $ 10,300 $ 10,609 $ 10,927 3 00 Total Operating Expenses $ 36,000 $ 39,961 $ 44,676 $ 50,402 Operating Profit $ 198,144 $ 233,839 $ 279,862 $ 340,983 Depreciation Buildings $ 31,818 $ 31,818 $ 31,818 $ 31,818 22 Depreciation Equipment $ 45,000 $ 45,000 $ 45,000 $ 45,000 4 Mortgage Interest Expense $ 27,894 $ 27,652 $ 27,389 $ 27,104 Bank Loan Interest Expense $ $ $ $ 10 00 Profit Before Taxes $ 93,431 $ 129,369 $ 175,655 $ 237,061 Taxes $ 14,015 $ 19,405 $ 26,348 $ 35,559 15 00 Net Profit After Taxes $ 79,417 $ 109,964 $ 149,307 $ 201,501 BALANCE SHEET Assets Minimum Cash $ 2,000 $ 2,000 $ 2,000 $ 2,000 Extra Cash $ 40,710 $ 227,926 $ 455,788 $ 736,754 Accounts Receivable $ 10,026 $ 12,022 $ 14,619 $ 18,091 Inventory $ 130 $ 140 $ 150 $ 162 Land $ 50,000 $ 50,000 $ 50,000 $ 50,000 Buildings $ 700,000 $ 700,000 $ 700,000 $ 700,000 Equipment $ 180,000 $ 180,000 $ 180,000 $ 180,000 Less Accumulated Depreciation Builiding $ 76,818 $ 108,636 $ 140,455 $ 172,273 Less Accumulated Depreciation Equipment $ 45,000 $ 90,000 $ 135,000 $ 180,000 Total Assets $ 861,047 $ 973,451 $ 1,127,102 $ 1,334,734 Liabilities and Equity Accounts Payable $ 540 $ 756 $ 1,586 $ 2,220 Income Tax Payable $ 14,015 $ 19,405 $ 26,348 $ 35,559 Mortgage on Buildings $ 347,076 $ 343,910 $ 340,481 $ 336,767 Extra Bank Loan $ $ $ Shareholder Contributions $ 420,000 $ 420,000 $ 420,000 $ 420,000 Retained Earnings $ 79,417 $ 189,381 $ 338,687 $ 540,189 Total Liabilities and Equity $ 861,048 $ 973,451 $ 1,127,102 $ 1,334,734 DFN $ (0) $ (0) $ 0 $ (0) DEBT Ratings Data Average Rating Level Comp T Bills Credit Spread Total EBIT interest coverage (x) 2 00 2 00 EBITDA interest coverage (x) 2 00 2 00 Total debt capital ( ) 2 00 2 00 6 8 Average 2 00 9 6 First, compute EBIT Interest Coverage (x) each year EBIT is the Operating Profit, adjusted to have all Depreciation Expense subtracted from it The interest coverage ratio is EBIT divided by the total interest expense for that year What ratio did you find in year 1 (round to 2 decimal places) Your Answer Then compute EBITDA Interest Coverage (x) each year EBITDA is another name for what we have called Operating Profit The interest coverage ratio is EBITDA divided by the total interest expense for that year What ratio did you find in year 1 (round to 2 decimal places) Your Answer Finally, compute the Total Debt Capital ( ) each year Total debt should only be the investment debt, not the payables, so it would only include the Mortgage Debt and the Extra Bank Loan Total capital should be only that debt, plus the Common Stock and Retained Earnings for that year What percent did you find in year 1 (round to 0 decimal places, and enter as a number with no percent sign, such as 85 for 85 ) Your Answer

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2012 2013 2014 2015 SALES UNIT FORECASTS Forecasted occupancy 100.00% 98.00% 96.04% 94.12% -2.00% Number of beds in complex 36 36 36 36 0.00% Monthly

		2012	2013	2014	2015
SALES UNIT FORECASTS
Forecasted occupancy		100.00%	98.00%	96.04%	94.12%	-2.00%
Number of beds in complex		36	36	36	36	0.00%
Monthly rent per bed		$ 497.00	$ 571.55	$ 657.28	$ 755.87	15.00%
Sandwich sales per person per month		10.0	14.0	19.6	27.4	40.00%
Price of Sandwiches		$ 6.00	$ 6.90	$ 7.94	$ 9.13	15.00%
Cost of Sandwiches		$ 1.50	$ 1.53	$ 1.56	$ 1.59	2.00%

RATIOS USED IN FORECAST
Average Rent and Sandwich receivables		15	15.3	15.606	15.91812	2.00%
Sandwich COGS average payment period		30	30	45	45
Inventory turnover ratio (sandwiches)		50.0	65.0	84.5	109.9	30.00%

INCOME STATEMENT
Revenues
	Rent	$ 214,704	$ 241,971	$ 272,702	$ 307,335
	Sandwiches	$ 25,920	$ 40,897	$ 64,527	$ 101,810

Cost of Goods Sold
	Sanwiches	$ 6,480	$ 9,068	$ 12,691	$ 17,760

Operating Expenses
	General and Administrative	$ 10,000	$ 11,756	$ 14,015	$ 17,003	4.16%
	Apartment Maintenance Service	$ 15,000	$ 16,905	$ 19,052	$ 21,472	6.99%
	Marketing	$ 1,000	$ 1,000	$ 1,000	$ 1,000
	Utilities	$ 10,000	$ 10,300	$ 10,609	$ 10,927	3.00%
	Total Operating Expenses	$ 36,000	$ 39,961	$ 44,676	$ 50,402

Operating Profit		$ 198,144	$ 233,839	$ 279,862	$ 340,983

Depreciation - Buildings		$ 31,818	$ 31,818	$ 31,818	$ 31,818	22
Depreciation - Equipment		$ 45,000	$ 45,000	$ 45,000	$ 45,000	4
Mortgage Interest Expense		$ 27,894	$ 27,652	$ 27,389	$ 27,104
Bank Loan Interest Expense		$ -	$ -	$ -	$ -	10.00%

Profit Before Taxes		$ 93,431	$ 129,369	$ 175,655	$ 237,061
Taxes		$ 14,015	$ 19,405	$ 26,348	$ 35,559	15.00%
Net Profit After Taxes		$ 79,417	$ 109,964	$ 149,307	$ 201,501


BALANCE SHEET
Assets
Minimum Cash		$ 2,000	$ 2,000	$ 2,000	$ 2,000
Extra Cash		$ 40,710	$ 227,926	$ 455,788	$ 736,754
Accounts Receivable		$ 10,026	$ 12,022	$ 14,619	$ 18,091
Inventory		$ 130	$ 140	$ 150	$ 162

Land		$ 50,000	$ 50,000	$ 50,000	$ 50,000
Buildings		$ 700,000	$ 700,000	$ 700,000	$ 700,000
Equipment		$ 180,000	$ 180,000	$ 180,000	$ 180,000
Less: Accumulated Depreciation - Builiding		$ 76,818	$ 108,636	$ 140,455	$ 172,273
Less: Accumulated Depreciation - Equipment		$ 45,000	$ 90,000	$ 135,000	$ 180,000

Total Assets		$ 861,047	$ 973,451	$ 1,127,102	$ 1,334,734

Liabilities and Equity
Accounts Payable		$ 540	$ 756	$ 1,586	$ 2,220
Income Tax Payable		$ 14,015	$ 19,405	$ 26,348	$ 35,559

Mortgage on Buildings		$ 347,076	$ 343,910	$ 340,481	$ 336,767
Extra Bank Loan			$ -	$ -	$ -

Shareholder Contributions		$ 420,000	$ 420,000	$ 420,000	$ 420,000
Retained Earnings		$ 79,417	$ 189,381	$ 338,687	$ 540,189

Total Liabilities and Equity		$ 861,048	$ 973,451	$ 1,127,102	$ 1,334,734

DFN		$ (0)	$ (0)	$ 0	$ (0)

DEBT

Ratings Data		Average	Rating Level	Comp T-Bills	Credit Spread	Total
	EBIT interest coverage (x)			2.00%		2.00%
	EBITDA interest coverage (x)			2.00%		2.00%
	Total debt / capital (%)			2.00%		2.00%

		6.8			Average	2.00%
		9.6

First, compute "EBIT Interest Coverage (x)" each year. EBIT is the Operating Profit, adjusted to have all Depreciation Expense subtracted from it. The interest coverage ratio is EBIT divided by the total interest expense for that year.

What ratio did you find in year 1? (round to 2 decimal places) ____________

Your Answer:

Then compute "EBITDA Interest Coverage (x)" each year. EBITDA is another name for what we have called Operating Profit. The interest coverage ratio is EBITDA divided by the total interest expense for that year.

What ratio did you find in year 1? (round to 2 decimal places) ____________

Your Answer:

Finally, compute the "Total Debt / Capital (%)" each year. Total debt should only be the investment debt, not the payables, so it would only include the Mortgage Debt and the Extra Bank Loan. Total capital should be only that debt, plus the Common Stock and Retained Earnings for that year.

What percent did you find in year 1? (round to 0 decimal places, and enter as a number with no percent sign, such as "85" for 85%) ____________

Your Answer: