Assignment: Chapter 8- Valuation Using the Income Approach You are considering the purchase of the Tiger Office Building similar to the Centre Point Office Building described in the textbook. A local real estate agent, Mike D. Tiger, sent you the summary marketing brochure with basic information on the property. To get a sense of the market you ordered and have received a Market Study from Les Baker, MAI. Your next step is to crunch some of the numbers to see if this is a property that will meet your investment goals. . Office rents for similar properties in this area average 535 per square foot and vacancies average 7%. Rents are projected to grow at 2% per year . Operating Expenses for similar properties in the area average $8 per square foot and are projected to grow at 1.5% per year . Capital Expenses for similar properties in the area average S6 per square foot and are projected to grow at 3% per year. . Going out cap rates after 5 years are projected to be 25 basis points larger than going in cap rates and Selling Expenses should average 5% when the property is sold. Building Size: 2800 ft2 GLA Gross Land Area: 21,000 ft2 Sale Price: $750,000 Unit Price: S267.86 /ft2 1. Construct a pro forma statement of the project's operating cash flows using an interactive Excel spreadsheet that provides menu input and the calculated answer. Assume that your holding period for analysis purposes is five years. 2. Calculate the Going-In Cap Rate. 3. Calculate the Effective Gross Income Multiplier 4. Calculate the reversion assuming a sale at the end of the holding period using the above interactive Excel spreadsheet that provides menu input and the calculated answer 5. Using the expected cash flows from 1 and 4, calculate the NPV of this investment opportunity assuming a 7% required rate of return. Assignment: Chapter 8- Valuation Using the Income Approach You are considering the purchase of the Tiger Office Building similar to the Centre Point Office Building described in the textbook. A local real estate agent, Mike D. Tiger, sent you the summary marketing brochure with basic information on the property. To get a sense of the market you ordered and have received a Market Study from Les Baker, MAI. Your next step is to crunch some of the numbers to see if this is a property that will meet your investment goals. . Office rents for similar properties in this area average 535 per square foot and vacancies average 7%. Rents are projected to grow at 2% per year . Operating Expenses for similar properties in the area average $8 per square foot and are projected to grow at 1.5% per year . Capital Expenses for similar properties in the area average S6 per square foot and are projected to grow at 3% per year. . Going out cap rates after 5 years are projected to be 25 basis points larger than going in cap rates and Selling Expenses should average 5% when the property is sold. Building Size: 2800 ft2 GLA Gross Land Area: 21,000 ft2 Sale Price: $750,000 Unit Price: S267.86 /ft2 1. Construct a pro forma statement of the project's operating cash flows using an interactive Excel spreadsheet that provides menu input and the calculated answer. Assume that your holding period for analysis purposes is five years. 2. Calculate the Going-In Cap Rate. 3. Calculate the Effective Gross Income Multiplier 4. Calculate the reversion assuming a sale at the end of the holding period using the above interactive Excel spreadsheet that provides menu input and the calculated answer 5. Using the expected cash flows from 1 and 4, calculate the NPV of this investment opportunity assuming a 7% required rate of return