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o L Year 9 M Year 10 N TV A B C D E F G 1 J K 1 Start Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 2 Key Assumptions 3 Construction cost ($) 1,250,000 4 Loan ($) 400,000 5 Loan interest rate 6.0% 6 Loan term (yrs.) 5 5 7 Hangar space (sq.ft.) 24,000 8 Rent ($/sq.ft. per month) 1.20 9 Rent inflator 2.0% 10 Operating Costs ($/yr.) 144,000 11 Cost inflator 2.0% 12 Tax rate 21.0% 13 Discount rate 7.0% 14 Depreciation/year ($) 10,000 15 Cash Flows 16 Rent Income 17 minus: Operating Costs 18 minus: Interest 19 minus: Depreciation 20 = Taxable Income 21 minus: Taxes 22 = Net Income 23 minus: Principal 24 = Net Operating Cash Flow 25 minus: Cash Outlay at Start 26 plus: Depreciation 27 = Total Cash Flows 28 NPV 29 IRR 30 Note: Tax shields are the tax gains from expensing interest and depreciation. The formula is interest or depreciation expense times the tax rate 31