You are considering the purchase of an apartment complex. The following assumptions are made: The purchase price is $2,000,000 There are 30 units and the market rent is $850/ month Market rents are expected to increase 4% per year Vacancy and collection loss is 10% Real Estate Taxes are expected to be $20,000 in year 1 and increase 5% per year Insurance is expected to be $10,000 in year 1 and increase 7% per year Utilities are expected to be 9% of EGI each year 12. Repairs and Maintenance costs are expected to be 7% of EGI each year 13 Grounds and Security costs are expected to by 6% of EGI each year 14 The market value of the investment is expected to increase 6% each year 15 Selling expenses will be 5% 16 The holding period is 5 years 1780% of the purchase price can be borrowed on a 30 -year, monthly payment mortgage 18 The annuf interest rate on the loan will be 8%. 19 Loan origination fees will be 1% of the loan amount (paid in the year the loan is taken out - Year 0 ) 20 There are no prepayment penalties if you pay the loan early. 21 Tenant Improvements are expected to be $3,000 lyear 22 Leasing Commissions are expected to be \$1,000/year 23 A roof repair totaling $15,000 will be completed in year 3 24 The required rate of retum for the investor is 12%. 25 Assume taxes are 30% of BTCF. Assignment: Fill out the income statement. Calculate the monthly mortgage payment to find debt service. What is the IRR and NPV of the property? (CFO = equity investment + loan origination fees) Calculate the ratios for one or five years as indicated on the worksheet To find the mortgage balance, principal and interest payments: Enter key strokes to find payment on the loan Enter 2nd Amort P1=1 enter, down arrow P2=12 enter, down arrow Balance of loan, principal and interest is displayed For year 2, P1 - 13 enter, down arrow P2=24 enter, down arrow Balance of loan, principal and interest is displayed Pro Forma Income Statement \begin{tabular}{|l|l|l|l|l|l|} \hline & & \multicolumn{5}{|c|}{ Year } \\ \cline { 2 - 6 } & 1 & 2 & 3 & 4 & 5 \\ \cline { 2 - 6 } PGI (Potontial Gross Income) \\ -vC (Nacancy/Colloction Loss) & & & & & \\ \hline \end{tabular}