If NIG would like to have a NPV of at least $1000, what is the risk (probability) it will not achieve this goal?
Naples Investment Group Acquisition Data Land Value $30,000 Buildings/Improvements $140,000 Purchase Price $170,000 Financing Data Down Payment $40,000 Amount Financed $130,000 APR 11.0% Term 20 Annual Payment $16,325 Economic Assumptions Annual Gross Rental Income Rental Income Growth Rate 4.0% V&C Allowance 3.0% Operating Expenses 45.0% Tax Rate 28.0% Property Value Growth Rate 2.5% Sales Commission 5.0% Discount Rate 12.0% C Cash Flows in Year Financial Summary 4 $35,000 $36,400 $37,856 $39,370 Gross Income Less: V&C Allowance Operating Exp. Net Operating Income Less: Depreciation Interest Taxable income $1,050 $15,750 $18,200 $1,092 $16,380 $18,928 $1,136 $17,035 $19,685 $9,617 $144.545 $38,177 $1,181 $17,717 $20,473 $182.722 $5,091 $14,300 ($1,191) $5,091 $14,077 (S240) $5,091 $13,830 $764 $5,091 $13,556 $1,826 5 Sales price @ year 5 S40,945 Less: Selling expense $1,228 Tax basis $18,425 Taxable gain $21,291 Proceeds from sale $5,091 Less: $13,251 Taxes $2.950 Loan payoff Net cash from sale $826 PV of sale proceeds $3,074 PV of cash flows Less: Original Equity $4,141 Total NPV $10,689.55 $117,390 $54.643 Taxes Paid (Saved) ($333) (567) $214 $511 Principal Paid $2,025 $2,248 $2,495 $2,769 $31,006 $11,001 $40,000 $2,007 Net Cash Flow $2,209 $2,670 $3,146 $3,636 Naples Investment Group Acquisition Data Land Value $30,000 Buildings/Improvements $140,000 Purchase Price $170,000 Financing Data Down Payment $40,000 Amount Financed $130,000 APR 11.0% Term 20 Annual Payment $16,325 Economic Assumptions Annual Gross Rental Income Rental Income Growth Rate 4.0% V&C Allowance 3.0% Operating Expenses 45.0% Tax Rate 28.0% Property Value Growth Rate 2.5% Sales Commission 5.0% Discount Rate 12.0% C Cash Flows in Year Financial Summary 4 $35,000 $36,400 $37,856 $39,370 Gross Income Less: V&C Allowance Operating Exp. Net Operating Income Less: Depreciation Interest Taxable income $1,050 $15,750 $18,200 $1,092 $16,380 $18,928 $1,136 $17,035 $19,685 $9,617 $144.545 $38,177 $1,181 $17,717 $20,473 $182.722 $5,091 $14,300 ($1,191) $5,091 $14,077 (S240) $5,091 $13,830 $764 $5,091 $13,556 $1,826 5 Sales price @ year 5 S40,945 Less: Selling expense $1,228 Tax basis $18,425 Taxable gain $21,291 Proceeds from sale $5,091 Less: $13,251 Taxes $2.950 Loan payoff Net cash from sale $826 PV of sale proceeds $3,074 PV of cash flows Less: Original Equity $4,141 Total NPV $10,689.55 $117,390 $54.643 Taxes Paid (Saved) ($333) (567) $214 $511 Principal Paid $2,025 $2,248 $2,495 $2,769 $31,006 $11,001 $40,000 $2,007 Net Cash Flow $2,209 $2,670 $3,146 $3,636
