Question
Construct the cash flow proforma statement for the following project by filling out the white cells of the following table. A 2-year levered equity investment
Construct the cash flow proforma statement for the following project by filling out the white cells of the following table.
- A 2-year levered equity investment between t=0 and t=2.
- The first NOI is 10 at t=1, and NOI grows at 5%/yr until t=3.
- The cap rate is 5% (going-in) at t=0 and increases by 0.5%/yr to 6% (going-out) at t=2.
- Capital Expenditures are 10% of NOI.
- The investment is levered with a two-year interest-only loan at a 5% interest rate with the face value of 80 (i.e., the initial loan amount is 80).
| T=0 | T=1 | T=2 | T=3 |
| Today | 1 year later | 2 years later | 3 years later |
| Cash flow at the beginning of the project | Cash flows for the first period (between t=0 and t=1) | Cash flows for the second period (between t=1 and t=2) and the last CF | Cash flows for the third period (between t=2 and t=3) and the last CF |
[Cap Rate] |
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NOI |
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Acquisition CF at t = 0 (<0) |
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Capital expenditures (<0) |
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Disposition CF at t = 2 (>0) |
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Property BT CF |
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Loan at t = 0 (>0) |
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DS incl. the final pmt. (<0) |
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Equity BT CF |
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