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Please explain how the Levered IRR is 13.8% and how much in profit is projected to be received on this project. Year 0 1 2
Please explain how the Levered IRR is 13.8% and how much in profit is projected to be received on this project.
| Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | ||
| Operations | Revenue | |||||||||||||
| Potential Gross Income | $1,520,000 | $1,565,600.0 | $1,612,568.0 | $1,660,945.0 | $1,710,773.4 | $1,762,096.6 | $1,814,959.5 | $1,869,408.3 | $1,925,490.5 | $1,983,255.2 | $2,042,752.9 | ####### | ||
| less: vacancy | (121,600) | (125,248) | (129,005) | (132,876) | (136,862) | (140,968) | (145,197) | (149,553) | (154,039) | (158,660) | (163,420) | (168,323) | ||
| Effective Gross Income | $1,398,400 | $1,440,352 | $1,483,563 | $1,528,069 | $1,573,912 | $1,621,129 | $1,669,763 | $1,719,856 | $1,771,451 | $1,824,595 | $1,879,333 | ####### | ||
| Expenses | ||||||||||||||
| General Op Expenses | (440,000) | (440,000) | (453,200) | (466,796) | (480,800) | (495,224) | (510,081) | (525,383) | (541,145) | (557,379) | (574,100) | (591,323) | ||
| Insurance | (20,000) | (20,000) | (20,600) | (21,218) | (21,855) | (22,510) | (23,185) | (23,881) | (24,597) | (25,335) | (26,095) | (26,878) | ||
| Property Taxes | (180,000) | (180,000) | (185,400) | (190,962) | (196,691) | (202,592) | (208,669) | (214,929) | (221,377) | (228,019) | (234,859) | (241,905) | ||
| Total Expenses | (640,000) | (640,000) | (659,200) | (678,976) | (699,345) | (720,326) | (741,935) | (764,193) | (787,119) | (810,733) | (835,055) | (860,106) | ||
| Net Operating Income | $758,400 | $800,352 | $824,363 | $849,093 | $874,566 | $900,803 | $927,827 | $955,662 | $984,332 | $1,013,862 | $1,044,278 | ####### | ||
| less: debt service | (574,132) | (574,132) | (574,132) | (574,132) | (574,132) | (574,132) | (574,132) | (574,132) | (574,132) | (574,132) | (574,132) | |||
| Cash Flow After Financing | $184,268 | $226,220 | $250,230 | $274,961 | $300,434 | $326,671 | $353,695 | $381,530 | $410,200 | $439,730 | $470,145 | |||
| Debt Yield | ||||||||||||||
| DSCR | 1.32 | 1.39 | 1.44 | 1.48 | 1.52 | 1.57 | 1.62 | 1.66 | 1.71 | 1.77 | 1.82 | |||
| Unlevered Yield | ||||||||||||||
| Equity Yield | ||||||||||||||
| Reversion | ||||||||||||||
| Sale Price | - | - | - | - | - | - | - | - | - | 11,951,180 | ||||
| less: Sales Expense | - | - | - | - | - | - | - | - | - | (358,535) | ||||
| Net Sales Proceeds | - | - | - | - | - | - | - | - | - | 11,592,644 | ||||
| less: Principal Balance | - | - | - | - | - | - | - | - | - | (3,943,404) | ||||
| Reversion Cash Flow | - | - | - | - | - | - | - | - | - | 7,649,240 | ||||
| Total Projected Profit | $800,352 | $824,363 | $849,093 | $874,566 | $900,803 | $927,827 | $955,662 | $984,332 | $1,013,862 | $8,693,518 | ||||
| Return Calculations | Unlevered Total Cash Flow | (9,064,000) | 800,352 | 824,363 | 849,093 | 874,566 | 900,803 | 927,827 | 955,662 | 984,332 | 1,013,862 | 12,636,922 | ||
| Unlevered IRR | 11.5% | |||||||||||||
| Unlevered EMx | 2.3x | |||||||||||||
| Levered Total Cash Flow | (3,344,000) | 226,220 | 250,230 | 274,961 | 300,434 | 326,671 | 353,695 | 381,530 | 410,200 | 439,730 | 8,119,386 | |||
| Levered IRR | 15.5% | |||||||||||||
| Levered EMx | 3.3x | |||||||||||||
| Total After Fin Cash Flow | (3,344,000) | 226,220 | 250,230 | 274,961 | 300,434 | 326,671 | 353,695 | 381,530 | 410,200 | 439,730 | 8,119,386 | |||
| IRR | 15.5% | |||||||||||||
| Profit | 7,739,054 | |||||||||||||
| Equity Multiple | 3.31x |
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Finance For Nonfinancial Managers
Authors: Gene Siciliano
2nd Edition
0071824367, 978-0071824361
