Item

Year 1

Year 2

Year 3

Year 4

Year 5

Reversion

Potential Gross Income

$1,762,500

$1,797,750

$1,833,705

$1,870,379

$1,907,787

$1,945,942

 Less: Allowances

141,000

143,820

146,696

149,630

152,623

155,675

 Add: Other Income

84,000

85,680

87,394

89,141

90,924

92,743

Effective Gross Income

$1,705,500

$1,739,610

$1,774,402

$1,809,890

$1,846,088

$1,883,010

Operating Expenses

Management

$51,975

$53,015

$54,075

$55,156

$56,259

$57,385

Utilities

277,200

282,744

288,399

294,167

300,050

306,051

Taxes

259,875

265,073

270,374

275,781

281,297

286,923

Insurance

60,638

61,851

63,088

64,350

65,637

66,949

Janitorial

86,625

88,358

90,125

91,927

93,766

95,641

Office

43,313

44,179

45,063

45,964

46,883

47,821

Repairs/Maintenance

103,950

106,029

108,150

110,313

112,519

114,769

Reserves

133,322

133,322

133,322

66,661

66,661

66,661

Total Operating Expense

$1,016,898

$1,034,570

$1,052,594

$1,004,318

$1,023,072

$1,042,200

Net Operating Income

$688,602

$705,040

$721,808

$805,572

$823,016

$840,810

Reversion Cap Rate

0.12

Reversion Value

$7,006,750

Discount Rate (12%)

0.892857

0.797194

0.711780

0.635518

0.567427

0.567427

Present value

$614,823

$562,054

$513,768

$511,955

$467,002

$3,975,818

Present value/cash flows

$6,645,421

Market Value (Rounded)

$6,645,000

Sale Price

$6.645,000

Mortgage Position

70%

$4,651,500

- Mortgage

Equity Position

30%

$1,993,500

- Equity

Mortgage Constant

0.0943929

Rate (7%)

Term (20 years)

Annual Debt Service

$439,069

Equity Dividend

$249,533

Equity Dividend Rate

12.52%

Cap Rate - Band of Investment

10.36%

Cap Rate - Debt Coverage Method

10.36%

Debt Coverage Ratio

1.57

Net Income Ratio

1.68

Operating Expense Ratio

0.60