DCF Instructed In-Class Practice Property Assumptions Purchase Price: $4,000,000 Year 1 Potential Gross Income (PGI): $540,000 PGI annual growth rate: 3% Annual Vacancy and Credit Loss (VCL): 10% Over next 4yrs. Year 1 operating expenses (OER): (Operating Expense Ratio) 35% OPEX annual growth rate: 2% Terminal Capitalization Rate: 9% Capitalize 4 th yr. NOI with Terminal Cap Rate Anticipated holding period 3 years Maximum loan-to-value (LTV) ratio: 70% Interest Rate (Loan): 5% Amortization Period: 30 years Payments per year: 12 Investors Discount Rate, aka Hurdle Rate (unleveraged) 15% Investors Discount Rate, aka Hurdle Rate (unleveraged) 15%

1. What are the NOIs for years 1-4?

2. What are the DCRs for years 1-3? (NOI/DS)

3. What are the Cash-on-Cash Returns for years 1-3? (BTCF/Initial Equity Investment)

4. What is the Unleveraged IRR and NPV?

5. What is the Leveraged IRR and NPV?