Question
In: Finance
Consider the following pro forma for the next 4 questions Potential Gross Income 100,000 sq. ft...
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Consider the following pro forma for the next 4 questions |
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Potential Gross Income 100,000 sq. ft for the coming year |
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average rent $15.00 per ft. |
$ 1,500,000 |
|
|
Less Vacancy Allowance (average 8%) |
$ (120,000) |
|
|
Effective Gross Income |
$ 1,380,000 |
|
|
Cleaning expenses (5% of net rev) |
$ (69,000) |
|
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Insurance ($ 0.02 per dollar replacement, R.C. = $40 per ft. |
$ (80,000) |
|
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Management & Maintenance (11% of revenue) |
$ (151,800) |
|
|
Reserve for Replacement (savings for major repairs) |
$ (50,000) |
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Property Taxes ($0.10 per $100 of R.C.) |
$ (4,000) |
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$ (354,800) |
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Estimated Net Operating Income |
$ 1,025,200 |
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What is the NPV of this investment at a discount rate of 12% (use the purchase price of $160,000) |
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Solutions
Expert Solution
NPV of this investment = present value of Estimated Net Operating Income - purchase price
present value of Estimated Net Operating Income = Estimated Net Operating Income/(1+discount rate) = $1,025,200/(1+0.12) = $1,025,200/1.12 = $915,357.14
NPV of this investment = $915,357.14 - $160,000 = $755,357.14
jeff jeffy answered 2 years agoRelated Solutions
Consider the following pro forma for the next 4 questions Potential Gross Income 100,000 sq. ft...
Consider the following pro forma for the next 4
questions
Potential Gross Income 100,000 sq. ft for the coming year
average rent $15.00 per ft.
$ 1,500,000
Less Vacancy Allowance (average 8%)
$ (120,000)
Effective Gross Income
$ 1,380,000
Cleaning expenses (5% of net rev)
$ (69,000)
Insurance ($ 0.02 per dollar replacement, R.C. = $40 per ft.
$ (80,000)
Management & Maintenance (11% of revenue)
$ (151,800)
Reserve for Replacement (savings for major repairs)
$ (50,000)
Property Taxes ($0.10...
Consider the following pro forma for the next 4 questions Potential Gross Income 100,000 sq. ft...
Consider the following pro forma for the next 4
questions
Potential Gross Income 100,000 sq. ft for the coming year
average rent $15.00 per ft.
$ 1,500,000
Less Vacancy Allowance (average 8%)
$ (120,000)
Effective Gross Income
$ 1,380,000
Cleaning expenses (5% of net rev)
$ (69,000)
Insurance ($ 0.02 per dollar replacement, R.C. = $40 per ft.
$ (80,000)
Management & Maintenance (11% of revenue)
$ (151,800)
Reserve for Replacement (savings for major repairs)
$ (50,000)
Property Taxes ($0.10...
Consider the following pro forma for the next 4questionsPotential Gross Income 100,000 sq. ft...
Consider the following pro forma for the next 4
questions
Potential Gross Income 100,000 sq. ft for the coming year
average rent $15.00 per ft.
$ 1,500,000
Less Vacancy Allowance (average 8%)
$ (120,000)
Effective Gross Income
$ 1,380,000
Cleaning expenses (5% of net rev)
$ (69,000)
Insurance ($ 0.02 per dollar replacement, R.C. = $40 per ft.
$ (80,000)
Management & Maintenance (11% of revenue)
$ (151,800)
Reserve for Replacement (savings for major repairs)
$ (50,000)
Property Taxes ($0.10...
Potential Gross Income 100,000 sq. ft for the coming year average rent $15.00 per ft. $ ...
Potential Gross Income 100,000 sq. ft for the coming year
average rent $15.00 per ft.
$ 1,500,000
Less Vacancy Allowance (average 8%)
$ (120,000)
Effective Gross Income
$ 1,380,000
Cleaning expenses (5% of net rev)
$ (69,000)
Insurance ($ 0.02 per dollar replacement, R.C. = $40 per ft.
$ (80,000)
Management & Maintenance (11% of revenue)
$ (151,800)
Reserve for Replacement (savings for major repairs)
$ (50,000)
Property Taxes ($0.10 per $100 of R.C.)
$
(4,000)
$ (354,800)
Estimated Net...
Potential Gross Income 100,000 sq. ft for the coming year average rent $15.00 per ft. $ ...
Potential Gross Income 100,000 sq. ft for the coming year
average rent $15.00 per ft.
$ 1,500,000
Less Vacancy Allowance (average 8%)
$ (120,000)
Effective Gross Income
$ 1,380,000
Cleaning expenses (5% of net rev)
$ (69,000)
Insurance ($ 0.02 per dollar replacement, R.C. = $40 per ft.
$ (80,000)
Management & Maintenance (11% of revenue)
$ (151,800)
Reserve for Replacement (savings for major repairs)
$ (50,000)
Property Taxes ($0.10 per $100 of R.C.)
$
(4,000)
$ (354,800)
Estimated Net...
Consider a 100,000 sq. ft. building that will be acquired (at price $0) and demolished by...
Consider a 100,000 sq. ft. building that will be acquired (at
price $0) and demolished by local government at the end of 15
years. Assume the building is fully leased building
under an absolute net lease structure (all expenses paid by
tenant); Consider 2 leases:
15 year lease at
$15/ft./yr.
5 year lease at
$15/ft./yr.
Suppose that $15 is the market rate and that the forecasted rent
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Chapter 4: 3. Fire Corp financial statements: Pro forma income statement Pro forma balance sheet Sales...
Chapter 4:
3. Fire Corp financial statements:
Pro forma income statement
Pro forma balance sheet
Sales
$ 32,000
Assets
$25,300
Debt
$ 5,800
Costs
$ 24,400
________
Equity
$ 19,500
Net income
$ 7,600
Total
$25,300
Total
$ 25,300
It expects 15% sales increase. It also predicts every item on
the balance sheet will increase
by 15% as well.
1.Create the pro forma statements.
2. What’s the plug variable here?
3. If Fire Corp pays half of income as dividend,...
Consider you have prepared Pro-forma income statements of a new venture that show a net income...
Consider you have prepared Pro-forma income statements of a new
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