(4) Fill in the sheet titled NPV-IRR Unlevered
Assume you purchase this property without any financing.
(4.a) What is your unleveraged IRR (using the base case of 3% NOI growth and 5.25% Exit Cap Rate).
Fill in the chart Breaking down the contribution of NOI and Terminal Value to Investment Return. Use the numbers from the Net Cash Flow line.
(4.b) Using the NCF from years 1 through 5 as presented, what would you be willing to pay if you wanted to earn a 10% IRR on this investment?
A B c D E F G H J K L M M N Investment Analysis $ 5,400,000.00 3.00% Year Year o Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $ 2.00% % 5%/4%/3%/2%/1%/0% Purchase Price Purchase Costs Loan Amount Loan Closing Costs $ $ 1 Inputs 2 Purchase Price 3 Purchase Costs 4 Loan amount 5 Loan Closing Costs 6 Prepayment Penalty 7 Debt Service 8 NOI Year 1 9 Going in cap rate 10 NOI growth rate 11 Exit Cap Rate Year 5 12 Selling Costs 13 14 15 16 17 18 19 274,448.76 #DIV/0! 5.08% 3.00% 5.25% 5.00% Net Operating Income (NOI) Debt Service Payment Capital Gain $0.00 Sale Price Selling Costs Loan Balance Repaid Loan Prepayment Penalty Sum of Net Cash flow $0.00 Net Cash Flow Cash on Cash Return IRR 20 A B D E F G H J 22 23 24 IRR Based on Different NOI Growth and Exit Cap #NUM! NOI Growth 3% 1% 2% 4% 5% 25 26 27 28 29 Cap Rate 4.50% 4.75% 5.00% 5.25% 5.50% 30 31 32 33 Discount Rate 10.00% Breaking Down the Contribution of NOI and Terminal Value to Investment Return Reversion End of Year NOI PV of NOI (Terminal Value) PV of Rev 1 2 2 3 34 35 36 37 38 39 40 41 42 Total PV $0.00 $0.00 $0.00 $0.00 $0.00 4 5 5 PV of the NOI for 5 years plus the PV of Terminal Value of Property $0.00 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 A B c D E F G H J K L M M N Investment Analysis $ 5,400,000.00 3.00% Year Year o Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $ 2.00% % 5%/4%/3%/2%/1%/0% Purchase Price Purchase Costs Loan Amount Loan Closing Costs $ $ 1 Inputs 2 Purchase Price 3 Purchase Costs 4 Loan amount 5 Loan Closing Costs 6 Prepayment Penalty 7 Debt Service 8 NOI Year 1 9 Going in cap rate 10 NOI growth rate 11 Exit Cap Rate Year 5 12 Selling Costs 13 14 15 16 17 18 19 274,448.76 #DIV/0! 5.08% 3.00% 5.25% 5.00% Net Operating Income (NOI) Debt Service Payment Capital Gain $0.00 Sale Price Selling Costs Loan Balance Repaid Loan Prepayment Penalty Sum of Net Cash flow $0.00 Net Cash Flow Cash on Cash Return IRR 20 A B D E F G H J 22 23 24 IRR Based on Different NOI Growth and Exit Cap #NUM! NOI Growth 3% 1% 2% 4% 5% 25 26 27 28 29 Cap Rate 4.50% 4.75% 5.00% 5.25% 5.50% 30 31 32 33 Discount Rate 10.00% Breaking Down the Contribution of NOI and Terminal Value to Investment Return Reversion End of Year NOI PV of NOI (Terminal Value) PV of Rev 1 2 2 3 34 35 36 37 38 39 40 41 42 Total PV $0.00 $0.00 $0.00 $0.00 $0.00 4 5 5 PV of the NOI for 5 years plus the PV of Terminal Value of Property $0.00 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60
