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You bought a piece of land at $1,500,000. You plan to build a 45,000 square foot building at cost of $150 per square foot, al

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Answer #1
Price of land $1,500,000 Rent per square foot $2
Area of Building (square foot) 45,000 Total rent per month $1,080,000
Cost per square foot $150 % increase in per year for rent 4%
Total cost of building $6,750,000 Operating expense per square foot $0.40
Depreciaion of building per year $173,076.92 Total operating expense $216,000.00
property value after 10 years(1/39 th of total cost of building $10,500,000 % increase in per year for operating expense 3%
Tax rate 35% Capital gain tax rate 20%
Discount rate 8%
Cash Flow Year
Items 0 1 2 3 4 5 6 7 8 9 10
Revenue 0 $1,080,000.00 $1,123,200.00 $1,168,128.00 $1,214,853.12 $1,263,447.24 $1,313,985.13 $1,366,544.54 $1,421,206.32 $1,478,054.57 $1,537,176.76
Operating Expense 0 $216,000.00 $222,480.00 $229,154.40 $236,029.03 $243,109.90 $250,403.20 $257,915.30 $265,652.75 $273,622.34 $281,831.01
EBITDA 0 $864,000.00 $900,720.00 $938,973.60 $978,824.09 $1,020,337.34 $1,063,581.93 $1,108,629.24 $1,155,553.57 $1,204,432.24 $1,255,345.75
Depreciation 0 $173,076.92 $173,076.92 $173,076.92 $173,076.92 $173,076.92 $173,076.92 $173,076.92 $173,076.92 $173,076.92 $173,076.92
Taxable income 0 $690,923.08 $727,643.08 $765,896.68 $805,747.16 $847,260.42 $890,505.01 $935,552.32 $982,476.64 $1,031,355.31 $1,082,268.83
Tax @35% rate 0 $241,823.08 $254,675.08 $268,063.84 $282,011.51 $296,541.15 $311,676.75 $327,443.31 $343,866.83 $360,974.36 $378,794.09
Net Income 0 $449,100.00 $472,968.00 $497,832.84 $523,735.66 $550,719.27 $578,828.26 $608,109.01 $638,609.82 $670,380.95 $703,474.74
Total Initial investment $8,250,000 0 0 0 0 0 0 0 0 0 0
Income from sale 0 0 0 0 0 0 0 0 0 $10,500,000
Capital gain 0 0 0 0 0 0 0 0 0 0 $2,250,000
Capital gain tax 0 0 0 0 0 0 0 0 0 0 $450,000
Net cash flow -$8,250,000 $622,176.92 $646,044.92 $670,909.76 $696,812.58 $723,796.20 $751,905.18 $781,185.93 $811,686.74 $843,457.88 $10,926,551.66
Discount Rate 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.08
Present Value -$8,250,000.00 $576,089.74 $553,879.39 $532,589.80 $512,178.05 $492,603.53 $473,827.81 $455,814.49 $438,529.09 $421,938.93 $5,061,107.58
NPV $1,268,558.41
IRR 10%
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