Gross Revenue Vacancy Effective Gross Income Operating Expense (Including Property Tax and Structural Res.) Net Operating Income Debt Service (8%, 30 years, annual payment) Cash Flow Before Tax Net Sales Proceeds (calc. below) Net Present Value (15% discount rate) Calculation of Net Sales Proceeds NOI in year 6/9% Cap Rate Less Sales Expense (2%) Less Repayment of Mortgage at the End of Year Five* Net Sales Proceeds Year 0 Year 1 $ 1,000 (200) 800 LA LA LA $ $ (3,327) $ $ $ 5,000 $ $ 3,500 $ $ 1,500 $ $ (1,500) $ (475) 325 (308) 17 17 Year 2 $1,030 %. Year 3 Year 4 Year 5 The Net Present Value of this $1.5 million equity investment discounted at 15% is: $ The Internal Rate of Return is: Year 6