Bank Loan:

Cost of building
Interest Rate
Loan Period
Monthly Loan Payment

($5,950,000)
10%
25
$54,067.69

Asumptions:
1- Cost of the appartment is $5,950,000
2- Time period for analysis is 10 years
3- Bank laon interest rate is assumed to be 10%
4- Loan period is 25 years

Annual Cah Flows

Gross rental income

$493,068

Total gross income

Less general vacancy/credit looses
(3.48% of total gross income)
Gross operating income

$493,068

Less operating expenses

Insurance
Maintenance
Manager salary
Other Expenses
Total operating expenses
Net operating income
Less debt financing
Net cash flow

$17,190
$475,878

$7,349
$21,275
$14,718
$141,929
($185,271)
$290,607
$26,373
$264,234

IRR & NPV Analysis

Year
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Cash Flow
PV factor
PV
($2,513,067)
1.0000
($2,513,067)
$264,234
0.9091
$240,213
$264,234
0.8264
$218,375
$264,234
0.7513
$198,523
$264,234
0.6830
$180,475
$264,234
0.6209
$164,069
$264,234
0.5645
$149,153
$264,234
0.5132
$135,594
$264,234
0.4665
$123,267
$264,234
0.4241
$112,061
$264,234
0.3855
$101,874
$264,234
0.3505
$92,612
$264,234
0.3186
$84,193
$264,234
0.2897
$76,539
$264,234
0.2633
$69,581
$264,234
0.2394
$63,256
NPV

IRR

($503,282)
6.32%