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Discounted Cash Flow Analysis
Utilizing Simultaneous Valuation Formula |
| Entries |
|
|
| |
Year |
Income |
| Projection
Term: |
5 |
1999 |
300,000 |
| Beginning Year: |
1999 |
2000 |
330,000 |
| Income
Inflation Rate: |
.02 |
2001 |
336,600 |
| Expense
Inflation Rate: |
0 |
2002 |
343,332 |
| Stabilized
Year: |
2 |
2003 |
350,198 |
| Mortgage
Interest Rate: |
.0875 |
2004 |
357,201 |
| Loan
Amortization (Yrs): |
25 |
|
| Loan To Value
Percent: |
.77 |
| Equity Yield
Rate: |
.17 |
| Going Out Cap
Rate: |
.105 |
| Loan Closing
Cost:
|
.08 |
| Conclusions |
|
| Debt service
constant |
.0986572363 |
|
Tot
property value |
3,098,493 |
|
| Loan to value x
DSC |
.0759660720 |
Mortgage
component |
2,385,839 |
| Percent
of loan paid |
.0696688092 |
Equity
component |
712,653 |
| Projection
period |
5 |
|
| Annual
debt service
|
235,380 |
|
Year |
Net Income |
Debt service |
Cash flow to
equity |
Debt
service coverage |
Mortgage
Balance |
Cash on cash
return |
|
| 1999 |
300,000 |
235,380 |
64,620 |
1.27 |
2,357,896 |
.0907 |
| 2000 |
330,000 |
235,380 |
94,620 |
1.40 |
2,327,522 |
.1328 |
| 2001 |
336,600 |
235,380 |
101,220 |
1.43 |
2,294,508 |
.1420 |
| 2002 |
343,332 |
235,380 |
107,952 |
1.46 |
2,258,624 |
.1515 |
| 2003
|
350,198 |
235,380 |
114,818 |
1.49 |
2,219,619 |
.1611 |
| Equity
reversion |
|
| Net
income sale year |
357,201 |
|
|
| Going
out cap rate |
10.50 |
Proof of value |
|
| |
Values |
Yields |
| Residual
(resale) |
3,401,914 |
|
Property |
3,098,493 |
10.80 |
| Less
mortgage bal |
2,219,620 |
|
Mortgage |
2,385,839 |
8.75 |
| Less
closing cost |
272,153 |
|
Equity |
712,653 |
17.00 |
| Equity
reversion
|
910,141 |
|
|
Net income flows for
yield/irr calculation |
| |
Year |
Property |
Mortgage |
Equity |
|
| 1999 |
300,000 |
235,380 |
64,620 |
| 2000 |
330,000 |
235,380 |
94,620 |
| 2001 |
336,600 |
235,380 |
101,220 |
| 2002 |
343,332 |
235,380 |
107,952 |
| 2003
|
3,479,959 |
2,455,000 |
1,024,959 |
|
Overall property yield/irr
10.801861 |
| |
Year |
Net income before D.S. |
PV of $1 at irr rate |
Discounted cash flow |
|
| 1999 |
300,000 |
.9025119172 |
270,754 |
| 2000 |
330,000 |
.8145277607 |
268,794 |
| 2001 |
336,600 |
.7351210109 |
247,442 |
| 2002 |
343,332 |
.6634554729 |
227,785 |
2003
|
3,479,959 |
.5987764708 |
2,083,718 |
| Total property
value |
3,098,493 |
| Last year
income before debt service |
350,198 |
|
Sale proceeds
|
3,129,761 |
| Final year net
income |
3,479,959 |
| Mortgage
component yield/irr
|
8.750000 |
| Year |
Total
annual debt service |
PV
of $1 at irr rate |
Discounted
cash flow |
| 1999 |
235,380 |
.9200098283 |
216,552 |
| 2000 |
235,380 |
.8464180841 |
199,230 |
| 2001 |
235,380 |
.7787129562 |
183,294 |
| 2002 |
235,380 |
.7164235731 |
168,632 |
2003
|
2,455,000 |
.6591167285 |
1,618,132 |
| Value
of mortgage component |
2,385,840 |
| Last year debt
service |
235,380 |
| Outstanding
mortgage balance |
2,219,620 |
| Final
year mortgage payment
|
2,455,000 |
| Equity
component yield/irr 17.0000 |
|
Year |
Cash flow to equity |
PV of $1 at irr rt |
Discounted cash flow |
| 1999 |
64,620 |
.8547007743 |
55,230 |
| 2000 |
94,620 |
.7305134137 |
69,121 |
| 2001 |
101,220 |
.6243703803 |
63,199 |
| 2002 |
107,952 |
.5336498475 |
57,608 |
2003
|
1,024,959 |
.4561109379 |
467,495 |
Value
of equity component
|
712,653 |
| Last
year income to equity |
114,818 |
Sale
proceeds to equity
|
910,141 |
| Final
year equity cash flow |
1,024,959 |
|
