Provide a full financial model and analysis with Levered and Unlevered NPV, IRR and Cash on Cash for both Before and After Tax. Then state if this is a financially wise investment, why or why not. (Show all work in excel if possible)

Property Assumptions:

• Purchase price: $5,450,000
• Acquisition costs: $150,000
• Property Type: Office
• Year one potential rental income: $765,000
• Annual PGI growth rate: 3.25 percent
• Vacancy and credit losses: 7 percent
• Other income: $29,000
• Other income annual growth rate: 3.0 percent
• Year one operating expenses: $310,000
• Operating expenses annual growth rate: 3.0 percent
• Land/improvement allocation
• Land: 20 percent
• Improvements: 80 percent
• Disposition price - capitalize sixth year NOI at 7.25 percent to determine EOY five disposition price (round to nearest thousand)
• Disposition cost of sale: 4 percent

Financing Assumptions:

• Loan amount: the loan will be the lesser of the amounts calculated using LTV ratio and DSCR and rounded down to the nearest thousand
• Maximum LTV ratio: 65 percent
• Minimum DSCR: 1.36
• Interest rate: 5.45 percent
• Amortization period: 20 years
• Loan term: 7 years
• Payments per year: 12
• Loan costs
• Lender's discount points: 1.3 percent of loan amount
• Third party costs: $25,000

Investor Assumptions:

• Anticipated holding period: 5 years
• Investor's tax rates
• Ordinary income: 37 percent
• Capital gain from cost recovery taken: 25 percent
• Capital gain from appreciation: 20 percent
• Weighted cost of capital: 13 percent