According to the all of the inputs in the model a $1,766,667 purchase price results in an After Tax NPV of $52,854 (approximately 3.0% of the purchase price). Would you suggest that the buyer purchase the property at that purchase price?
| Less Vacancy | | 7% | 7% | 7% | 7% | 7% | 7% | |
| | | $ 21,000 | $ 21,525 | $ 22,063 | $ 22,615 | $ 23,180 | $ 23,760 | |
| Effective Gross Income | | $ 279,000 | $ 285,975 | $ 293,124 | $ 300,452 | $ 307,964 | $ 315,663 | |
| Less Operating Expenses | | $ 120,000 | $ 123,000 | $ 126,075 | $ 129,227 | $ 132,458 | $ 135,769 | |
| Net Operating Income | | $ 159,000 | $ 162,975 | $ 167,049 | $ 171,226 | $ 175,506 | $ 179,894 | |
| Annual Debt Service | | $117,500 | $117,500 | $117,500 | $117,500 | $117,500 | $117,500 | |
| Before Tax Cash Flow from Operations | | $ 41,500 | $ 45,475 | $ 49,550 | $ 53,726 | $ 58,007 | $ 62,394 | $ 310,653 |
Original Sheet2 Sheet3 Sheet3 Sleepy Manor Apartments Number of Units Average Monthly Rent Per Unit Monthly Expenses Vacancy Rate Inflation Overall Capitalization Rate Terminal Cap Rate Present Value Discount Rate 50 $500 $200 7% 2.50% 9.00% 9.50% 11.00% Price Land to Building Ratio Price Allocated to Bldg. Price Allocated to Land 1,766,666.667 (First Year NOI Capitalized at above Rate) 20.00% 1,413.333.333 353,333.333 Cost Recovery Period Income Tax Rate Capital Gains Rate 27.5 28.0% 15.0% Loan to Value Term Interest Rate 75% 25 (25 Year Term Amortized Monthly) 7.5% Year Loan Payment EOY Bal. Interest 1.325,000 $9,791.63 $1,306,239 $98,739 2 $1,306,239 $9,791.63 $1.286,022 $97.282 3 $1,286,022 $9.791.63 $1,264, 235 $95,713 $1,264,235 $9,791.63 $1.240,757 $94,021 5 $1.240,757 $9,791.63 $1,215,456 $92,199 $1,215,456 $9,791.63 $1,188,191 $90,235 Before Tax Cash Flows Gross Income Less Vacancy 1 300.000 7% 21.000 2 307,500 7% 21.525 3 315.187.5 7% 22,063.125 4 323.067.188 7% 22.614.703 S 331,143.867 7% 23.180.071 6 339.422.464 7% 23.759.572 After Tax Cash Flow Net Operating Income Depreciation interest Taxable Income Taxes After Tax Cash Flow from Operations 159,000 51,393.939 $98,739 8,867.258 2,482.832 39,017.571 162.975 51,393.939 $97.282 14,298.707 4,003.638 41,471.765 167,049.375 51,393.939 $95,713 19.942.599 5,583.928 43,965.85 171,225,609 51,393.939 $94,021 25.810.197 7,226.855 46,499.157 175,506.25 51,393.939 $92,199 31,913.505 8,935.781 49,070.871 179,893.906 51,393.939 $90.235 38,265.327 10,714.292 51,680,017 Sales Price Less Sales Exp-3% Gross Proceeds Basis Capital Gain Capital Gain Tax Net Gain 1,715,526,316 51,465.789 1.664,060.526 1.715.272 727 -51,212.201 -7.681.83 -43,530.371 1.758,414.474 1,802,374.836 1,847,434.206 1.893,620.062 52.752.434 54,071.245 55,423.026 56.808.602 1,705,662.039 1,748,303.591,792,011.18 1,836,811.46 1.663,878.788 1.612.484.848 1.561.090,909 1.509.696.97 41.783.252 135,818.742 230.920,271 327,114,49 6,267.488 20.372.811 34,638,041 49,067.174 35,515.764 115,445.931 196,282 23 278,047.317 After-Tax Net Proceeds from Sale 572.288.001 Equity -441,666.667 Before-Tax CF Operations and Sale Yr 1 41,500.403 Yr 2 45,475.403 Yr 3 49,549.778 Yr 4 53,726,012 Yrs 706,626.784 IRR Before Tax Cash Flows NPV 17.6% $111,351 39,017.571 41,471.765 43,965.85 46,499.157 621,358.872 After-Tax Cash Flows IRR ATCF NPV -441,666.667 14.3% S52,854 Breakeven Occupancy: 79% 78% 77% 76% 75% 75% Partition ATIRR: PV After Tax Cash Flows from Operations PV After Tax Sales Proceeds $147,852.68 $293.813.99 $441,666.67 % 33% 67% 100% Original Sheet2 Sheet3 Sheet3 Sleepy Manor Apartments Number of Units Average Monthly Rent Per Unit Monthly Expenses Vacancy Rate Inflation Overall Capitalization Rate Terminal Cap Rate Present Value Discount Rate 50 $500 $200 7% 2.50% 9.00% 9.50% 11.00% Price Land to Building Ratio Price Allocated to Bldg. Price Allocated to Land 1,766,666.667 (First Year NOI Capitalized at above Rate) 20.00% 1,413.333.333 353,333.333 Cost Recovery Period Income Tax Rate Capital Gains Rate 27.5 28.0% 15.0% Loan to Value Term Interest Rate 75% 25 (25 Year Term Amortized Monthly) 7.5% Year Loan Payment EOY Bal. Interest 1.325,000 $9,791.63 $1,306,239 $98,739 2 $1,306,239 $9,791.63 $1.286,022 $97.282 3 $1,286,022 $9.791.63 $1,264, 235 $95,713 $1,264,235 $9,791.63 $1.240,757 $94,021 5 $1.240,757 $9,791.63 $1,215,456 $92,199 $1,215,456 $9,791.63 $1,188,191 $90,235 Before Tax Cash Flows Gross Income Less Vacancy 1 300.000 7% 21.000 2 307,500 7% 21.525 3 315.187.5 7% 22,063.125 4 323.067.188 7% 22.614.703 S 331,143.867 7% 23.180.071 6 339.422.464 7% 23.759.572 After Tax Cash Flow Net Operating Income Depreciation interest Taxable Income Taxes After Tax Cash Flow from Operations 159,000 51,393.939 $98,739 8,867.258 2,482.832 39,017.571 162.975 51,393.939 $97.282 14,298.707 4,003.638 41,471.765 167,049.375 51,393.939 $95,713 19.942.599 5,583.928 43,965.85 171,225,609 51,393.939 $94,021 25.810.197 7,226.855 46,499.157 175,506.25 51,393.939 $92,199 31,913.505 8,935.781 49,070.871 179,893.906 51,393.939 $90.235 38,265.327 10,714.292 51,680,017 Sales Price Less Sales Exp-3% Gross Proceeds Basis Capital Gain Capital Gain Tax Net Gain 1,715,526,316 51,465.789 1.664,060.526 1.715.272 727 -51,212.201 -7.681.83 -43,530.371 1.758,414.474 1,802,374.836 1,847,434.206 1.893,620.062 52.752.434 54,071.245 55,423.026 56.808.602 1,705,662.039 1,748,303.591,792,011.18 1,836,811.46 1.663,878.788 1.612.484.848 1.561.090,909 1.509.696.97 41.783.252 135,818.742 230.920,271 327,114,49 6,267.488 20.372.811 34,638,041 49,067.174 35,515.764 115,445.931 196,282 23 278,047.317 After-Tax Net Proceeds from Sale 572.288.001 Equity -441,666.667 Before-Tax CF Operations and Sale Yr 1 41,500.403 Yr 2 45,475.403 Yr 3 49,549.778 Yr 4 53,726,012 Yrs 706,626.784 IRR Before Tax Cash Flows NPV 17.6% $111,351 39,017.571 41,471.765 43,965.85 46,499.157 621,358.872 After-Tax Cash Flows IRR ATCF NPV -441,666.667 14.3% S52,854 Breakeven Occupancy: 79% 78% 77% 76% 75% 75% Partition ATIRR: PV After Tax Cash Flows from Operations PV After Tax Sales Proceeds $147,852.68 $293.813.99 $441,666.67 % 33% 67% 100%
