You come across an old warehouse property for sale and want to determine whether its a good investment. The asking price is $1.4 million but you think it will need another $250,000 in improvements to make it competitive.

After careful analysis you determine that the stabilized Net Operating Income for the property (once renovated) will be $170,000 per year. Your research reveals that the market capitalization rate for this type of property (also after renovation) is 8.50%.

(a). Find the Simple Profit (Net Present Value) for this investment by creating a complete Direct Capitalization Analysis (as seen in lecture) in Microsoft Excel and paste the table below. Among other items, be sure to include:

• Market Net Income Multiplier
• Stabilized Value
• Total Project Cost
• Simple Profit (Net Present Value)

Note: After you've pasted your table below, please highlight your entire table and select 10pt Font Size from the formatting toolbar.

(b). Calculate the Project Return Metrics (as shown in lecture) in Excel and paste the table below. Among other items, be sure to include the Project Capitalization Rate and Project Net Income Multiplier.

Note: After you've pasted your table below, please highlight your entire table and select 10pt Font Size from the formatting toolbar