Legend

Input Cells

Formula Cells

Description Cells

NOSHOW

DCF Analysis Input Sheet -4/8/2008

Clear & Reset
Instructions :

Property Assumptions
1

Name

Drug Store Tenant

2

Location

Main and Main

3

Type of Property

Retail

4

Purpose of Analysis

Risk Analysis

5

Prepared By

6

Size (Square feet or Number of Units)

7

Assessed/Appraised Value of Land

8

Assessed/Appraised Value of Improvements

Scottsdale Analysts
15,000

Dollar Amount
Dollar Amount
Non-Residential (Commercial)

$3,200,000
$1,800,000

9

Assessed/Appraised Value of Personal Property

10

Useful Life of Improvements (Years)

11

Useful Life of Personal Property (Years)

12

Acquisition Price

13

Acquisition Costs

14

Potential Rental Income and Escalations

15

Potential Rental Income

16

Other Income (Collectable)

17

Annual Vacancy Rates (Percent of Potential Rental Income)

18

Operating Expenses and Escalations

19

Total Operating Expenses

39.0

$1,000,000

Dollar Amount
Year 1

Year 2

Loan Amount
Interest Rate

22

Amortization Period (Years)

23

Loan Term (Years)

24

Payments Per Year

25

Loan Costs

Investor/Owner Assumptions
26

Ordinary Income Marginal Tax Rate

27

Capital Gains Tax Rate

28

Cost Recovery Recapture Tax Rate

29

Total Capital to Invest

30

After Tax Reinvestment Rates

31

Year 2

Year 2

1st Mortgage

Dollar Amount

Anticipated Holding Period (1 - 10 Years)

32

Disposition Price

33

Disposition Cost of Sale

Year 4
0.00%

Year 3

Year 5
0.00%

Year 5

Year 4

20
20
12

12

35.00%
15.00%
25.00%
$5,000,000
$0

To

$0

To

5.00%
5.00%
And above

10

Cap Rate
Percent of Disposition Price
7.50%
3.50%

1
1
1
1
1

5.00%

Year 7
0.00%

Year 6
0.00%

Year 5

2nd Mortgage

Twelve
Percent of Loan Amount

Year 6
0.00%

0.00%

7.50%

$0
31

Year 3
0.00%

Year 1

Financing Assumptions
21

Year 4
0.00%

Year 1

20

Year 3

Yr 1 total amount and annual % changes

Year 7
0.00%

Year 6

Year 8
0.00%

Year 8
0.00%

Year 7

Year 9
0.00%

Year 9
0.00%

Year 8

Year 10
0.00%

Year 10
0.00%

Year 9

0.00%

0.00%

Year 10

Year 11
0.00%

Year 11
0.00%

Year 11

Note: Do not enter any information on this sheet.
All values are derived from Input
Sheet.

Cash Flow Analysis Worksheet-Without Financing
Property Name

Drug Store Tenant

Acquisition Price

Location

Main and Main

Plus Acquisition Costs

$0

Type of Property

Retail

Plus Loan Costs

$0

Size of Property (sf/units)

15,000

Minus Mortgages

Purpose of Analysis

Risk Analysis

Equals Initial Investment

Prepared by

Scottsdale Analysts

Date Prepared

April 8, 2008

MORTGAGE DATA
1st Mortgage

$1,000,000

$0
$1,000,000

COST RECOVERY DATA
2nd Mortgage

Improvements

Amount

Value

Interest Rate

C. R. Method

Amortization Period

Useful Life

Loan Term

In Service Date

Payments/Year

Date of Sale

BASIS DATA

Personal Property

$1,800,000

$0 Acquisition Price

SL

$1,000,000

SL Acquisition Costs

39.0

$0

0 Total Acquisition Basis

1-Jan

1-Jan

31-Dec

31-Dec

Periodic Payment

12 Months % age

2.564%

0.000%

Annual Debt Service

11.5 Months % age

2.457%

0.000%

$1,000,000

Loan Fees/Costs

TAXABLE INCOME
End of Year

1

2

3

4

5

6

7

8

9

10

11

1

POTENTIAL RENTAL INCOME

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

2

-Vacancy & Credit Losses

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

3

EFFECTIVE RENTAL INCOME

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

4

+Other Income (collectable)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

5

GROSS OPERATING INCOME

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

6

TOTAL OPERATING EXPENSES

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

7

NET OPERATING INCOME

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

8

-Interest-First Mortgage

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

9

-Interest-Second Mortgage

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

10 -Cost Recovery-Improvements

$44,226

$46,152

$46,152

$46,152

$46,152

$46,152

$46,152

$46,152

$46,152

$44,226

11 -Cost Recovery-Personal Property

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

12 -Loan Costs Amortization

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

15 REAL ESTATE TAXABLE INCOME

($44,226)

($46,152)

($46,152)

($46,152)

($46,152)

($46,152)

($46,152)

($46,152)

($46,152)

($44,226)

16 Tax Liability (Savings) at 35%

($15,479)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($15,479)

17 NET OPERATING INCOME (LINE 8)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

18 -Annual Debt Service

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

13 14 -

CASH FLOW

19 20 21 22 CASH FLOW BEFORE TAXES
23 -Tax Liability (Savings) (Line 17 )
24 CASH FLOW AFTER TAXES

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

($15,479)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($15,479)

$15,479

$16,153

$16,153

$16,153

$16,153

$16,153

$16,153

$16,153

$16,153

$15,479

$0

Note: Do not enter any information on this sheet.
All values are derived from other sheets.

Cash Sale Worksheet-Without Financing
MORTGAGE BALANCES
1 End of Year:

1

2

3

4

5

6

7

8

9

10

2 Principal Balance - 1st Mortgage

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

3 Principal Balance - 2nd Mortgage

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

4 TOTAL UNPAID BALANCE

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

CALCULATION OF SALE PROCEEDS
5 END OF YEAR

1

6 PROJECTED SALES PRICE (Rounded to nearest 000)

2

3

4

5

6

7

8

9

10

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

7 Basis at Acquisition

$0

$0

$0

$0

$0

$0

$0

$0

$0

$1,000,000

8 +Capital Additions

$0
$0

$0

$0

$0

$0

$0

$0

$0

$457,668

CALCULATION OF ADJUSTED BASIS
9 -Cost Recovery (Depreciation) Taken

$0

10 -Basis in Partial Sales

$0

11 =Adjusted Basis at Sale

$0

$0

$0

$0

$0

$0

$0

$0

$0

$542,332

12 Sale Price

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

13 -Costs of Sale

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

14 -Adjusted Basis at Sale (Line 5)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$542,332

16 =Gain or (Loss)

$0

$0

$0

$0

$0

$0

$0

$0

$0

($542,332)

17 -Straight Line Cost Recovery (limited to gain)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

18 -Suspended Losses

$0

19 =Capital Gain from Appreciation

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

23 Sale Price

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

24 Cost of Sale

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

25 -Participaiton Payments on Sale

$0

26 -Mortgage Balance(s)

$0

$0

$0

$0

$0

$0

$0

$0

$0

27 +Balance of Funded Reserves

$0

28 =SALE PROCEEDS BEFORE TAX

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

29 -Tax (Savings)on Ordinary Income (Line 22 x 35%)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

30 -Tax on Cost Recovery Recapture (Line 17 x 25%)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

31 -Tax on Capital Gain (Line 19 x 15%)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

32 =SALE PROCEEDS AFTER TAX

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

CALCULATION OF CAPITAL GAIN ON SALE

15 -

ITEMS TAXED AS ORDINARY INCOME
20 Unamortized Loan Fees/Costs (negative)
21 +
22 =Ordinary Taxable Income

CALCULATION OF SALE PROCEEDS

Legend

Input Cells

Formula Cells

Description Cells

NPV And IRR-Without Financing

Before Tax
EOY
0

After Tax

$

EOY

($1,000,000)

$

0

($1,000,000)

1

$0

$0

1

$15,479

$0

2

$0

$0

2

$16,153

$0

3

$0

$0

3

$16,153

$0

4

$0

$0

4

$16,153

$0

5

$0

$0

5

$16,153

$0

6

$0

$0

6

$16,153

$0

7

$0

$0

7

$16,153

$0

8

$0

$0

8

$16,153

$0

9

$0

$0

9

$16,153

10

$0

10

$15,479

IRR =

Err:523

NPV @

Err:523

+

=

$0

Err:523

IRR =

Err:523

NPV @

Err:523

0

O
1
2
3
4
5
6
7
8
9
10

($1,000,000)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0

0

O
1
2
3
4
5
6
7
8
9
10

($1,000,000)
$15,479
$16,153
$16,153
$16,153
$16,153
$16,153
$16,153
$16,153
$16,153
$15,479

$0

+

$0

=

Err:523

Note: Do not enter any information on this sheet.
All values are derived from other
sheets.

Cash Flow Analysis Worksheet-With Financing
Property Name

Drug Store Tenant

Acquisition Price

Location

Main and Main

Plus Acquisition Costs

$0

Type of Property

Retail

Plus Loan Costs

$0

Size of Property (sf/units)

15,000

Minus Mortgages

Purpose of Analysis

Risk Analysis

Equals Initial Investment

Prepared by

Scottsdale Analysts

Date Prepared

April 8, 2008

MORTGAGE DATA
1st Mortgage
Amount
Interest Rate

$0

$0

Loan Term
Payments/Year

Improvements
$0

7.50%
20

$1,000,000

COST RECOVERY DATA
2nd Mortgage

Amortization Period

Periodic Payment

$1,000,000

Value

$1,800,000

0.00% C. R. Method
0

Useful Life

20

0

In Service Date

12

12

$0.00

BASIS DATA

Personal Property
$0 Acquisition Price

SL
39.0

Date of Sale

$0.00 12 Months % age

Annual Debt Service

$0

$0 11.5 Months % age

Loan Fees/Costs

$0

$0

$1,000,000

SL Acquisition Costs

$0

0 Total Acquisition Basis

1-Jan

1-Jan

31-Dec

31-Dec

2.564%

0.000%

2.457%

0.000%

$1,000,000

TAXABLE INCOME
End of Year

1

2

3

4

5

6

7

8

9

10

11

1

POTENTIAL RENTAL INCOME

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

2

-Vacancy & Credit Losses

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

3

EFFECTIVE RENTAL INCOME

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

4

+Other Income (collectable)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

5

GROSS OPERATING INCOME

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

6

TOTAL OPERATING EXPENSES

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

7

NET OPERATING INCOME

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

8

-Interest-First Mortgage

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

9

-Interest-Second Mortgage

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

10 -Cost Recovery-Improvements

$44,226

$46,152

$46,152

$46,152

$46,152

$46,152

$46,152

$46,152

$46,152

$44,226

11 -Cost Recovery-Personal Property

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

12 -Loan Costs Amortization

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

15 REAL ESTATE TAXABLE INCOME

($44,226)

($46,152)

($46,152)

($46,152)

($46,152)

($46,152)

($46,152)

($46,152)

($46,152)

($44,226)

16 Tax Liability (Savings) at 35%

($15,479)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($15,479)

17 NET OPERATING INCOME (LINE 8)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

18 -Annual Debt Service

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

13 14 -

CASH FLOW

19 20 21 22 CASH FLOW BEFORE TAXES
23 -Tax Liability (Savings) (Line 17 )
24 CASH FLOW AFTER TAXES

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

($15,479)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($16,153)

($15,479)

$15,479

$16,153

$16,153

$16,153

$16,153

$16,153

$16,153

$16,153

$16,153

$15,479

$0

Note: Do not enter any information on this sheet.
All values are derived from other sheets.

Cash Sale Worksheet-With Financing
MORTGAGE BALANCES
1 End of Year:

1

2

3

4

5

6

7

8

9

10

2 Principal Balance - 1st Mortgage

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

3 Principal Balance - 2nd Mortgage

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

4 TOTAL UNPAID BALANCE

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

CALCULATION OF SALE PROCEEDS
5 END OF YEAR

1

6 PROJECTED SALES PRICE (Rounded to nearest 000)

2

3

4

5

6

7

8

9

10

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

7 Basis at Acquisition

$0

$0

$0

$0

$0

$0

$0

$0

$0

$1,000,000

8 +Capital Additions

$0
$0

$0

$0

$0

$0

$0

$0

$0

$457,668

CALCULATION OF ADJUSTED BASIS
9 -Cost Recovery (Depreciation) Taken

$0

10 -Basis in Partial Sales

$0

11 =Adjusted Basis at Sale

$0

$0

$0

$0

$0

$0

$0

$0

$0

$542,332

12 Sale Price

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

13 -Costs of Sale

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

14 -Adjusted Basis at Sale (Line 5)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$542,332

16 =Gain or (Loss)

$0

$0

$0

$0

$0

$0

$0

$0

$0

($542,332)

17 -Straight Line Cost Recovery (limited to gain)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

18 -Suspended Losses

$0

19 =Capital Gain from Appreciation

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

23 Sale Price

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

24 Cost of Sale

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

25 -Participaiton Payments on Sale

$0

26 -Mortgage Balance(s)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

27 +Balance of Funded Reserves

$0

28 =SALE PROCEEDS BEFORE TAX

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

29 -Tax (Savings)on Ordinary Income (Line 22 x 35%)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

30 -Tax on Cost Recovery Recapture (Line 17 x 25%)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

31 -Tax on Capital Gain (Line 19 x 15%)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

32 =SALE PROCEEDS AFTER TAX

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

CALCULATION OF CAPITAL GAIN ON SALE

15 -

ITEMS TAXED AS ORDINARY INCOME
20 Unamortized Loan Fees/Costs (negative)
21 +
22 =Ordinary Taxable Income

CALCULATION OF SALE PROCEEDS

Legend

Input Cells

Formula Cells

Description Cells

NPV And IRR-With Financing

Before Tax
EOY
0

After Tax

$

EOY

($1,000,000)

$

0

($1,000,000)

1

$0

$0

1

$15,479

$0

2

$0

$0

2

$16,153

$0

3

$0

$0

3

$16,153

$0

4

$0

$0

4

$16,153

$0

5

$0

$0

5

$16,153

$0

6

$0

$0

6

$16,153

$0

7

$0

$0

7

$16,153

$0

8

$0

$0

8

$16,153

$0

9

$0

$0

9

$16,153

10

$0

$0

10

$15,479

IRR =

Err:523

NPV @

Err:523

+

=

Err:523

IRR =

Err:523

NPV @

Err:523

0

O
1
2
3
4
5
6
7
8
9
10

($1,000,000)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0

=
0

O
1
2
3
4
5
6
7
8
9
10

$0

+

($1,000,000)
$15,479
$16,153
$16,153
$16,153
$16,153
$16,153
$16,153
$16,153
$16,153
$15,479

$0

Err:523

Note: Do not enter any information on this sheet.
All values are derived from other sheets.

Cost of Funds And Leverage Impact
Before and After Tax Cost of Funds
Loan Information
Loan Amount
Interest Rate
Amortization Period
Payments Per Year
Discount Points
Projected Holding Period

Non-discounted Loan
$0
7.50%
20
12
$0
10

EOP
0
1

$
$0
$0.00

120

$0.00

+

Before Tax Cost =
Before Tax Cost of Funds x
#VALUE!

(1-Tax Rate)

Relationship Between Cost of Funds and Prorperty Yield
Cost of Funds
Before Tax
After Tax

#VALUE!
#VALUE!

Effective Tax Rate and Yield Change

Before Tax Yield
After Tax Yield
Effective Tax Rate

Mortgage
Portfolio
Err:523
Err:523
35%

enter any information on this sheet.
ues are derived from other sheets.

act

scounted Loan

Discounted Loan
EOP
0
1

$0

#VALUE!

st of Funds x

$
$0
$0.00

120

$0.00

+

$0

Before Tax Cost = #VALUE!

(1-Tax Rate) = After Tax Cost of Funds
x
65.00% =
#VALUE!

Prorperty Yield
Property Yield
Err:523
Err:523

Err:523
Err:523

Real Estate
Without
Financing
Err:523

Err:523

Err:523

Err:523

Err:523

Real Estate
With
Financing
Err:523
Err:523
Err:523

Note: Do not enter any information on this sheet.
All values are derived from other sheets.

Capital Accumulation Without Financing
Total Capital to Invest = $5,000,000
EOY
0

$
($1,000,000)

($4,000,000)

1

$15,479

$0

2

$16,153

3

$16,153

$0

4

$16,153

$0

5

$16,153

$0

6

$16,153

$0

7

$16,153

$0

8

$16,153

$0

9

$16,153

$0

10

$15,479 +

$0

5.00%

+

$16,253 =

$32,406
5.00%

+

$34,027 =

$50,180

+

$52,689

5.00%

IRR =

Err:523
Total Capital
Invested

$5,000,000

Annual After Tax Compound Growth Rate of Capita

($1,000,000)
$15,479
$16,153
$16,153
$16,153
$16,153
$16,153
$16,153
$16,153
$16,153
$15,479

ormation on this sheet.
ed from other sheets.

5.00%

=

$68,842

+

$72,284 =

5.00%

$88,437
5.00%

+

$92,859 =

$109,012
5.00%

+

$114,463 =

$130,616
5.00%

+

$137,147

=

$153,300

+

$160,965 =

5.00%

+

Capital Accumulation
10 Years

h Rate of Capital

$6,717,032
3.00%

Capital
Accumulation

$6,515,579
$0
$0
$0
$0
$0
$0
$0
$0
$177,118

$0

5.00%

$185,974 =

$201,453

al Accumulation =

$6,717,032

Note: Do not enter any information on this sheet.
All values are derived from other sheets.

Capital Accumulation With Financing
Total Capital to Invest = $5,000,000
EOY
0

$
($1,000,000)

($4,000,000)

1

$15,479

$0

2

$16,153

3

$16,153

$0

4

$16,153

$0

5

$16,153

$0

6

$16,153

$0

7

$16,153

$0

8

$16,153

$0

9

$16,153

$0

10

$15,479 +

$0

5.00%

+

$16,253 =

$32,406
5.00%

+

$34,027 =

$50,180

+

$52,689

5.00%

IRR =

Err:523
Total Capital
Invested

$5,000,000

Annual After Tax Compound Growth Rate of Capita

($1,000,000)
$15,479
$16,153
$16,153
$16,153
$16,153
$16,153
$16,153
$16,153
$16,153
$15,479

ormation on this sheet.
ed from other sheets.

5.00%

=

$68,842

+

$72,284 =

5.00%

$88,437
5.00%

+

$92,859 =

$109,012
5.00%

+

$114,463 =

$130,616
5.00%

+

$137,147

=

$153,300

+

$160,965 =

5.00%

+

Capital Accumulation
10 Years

h Rate of Capital

$6,717,032
3.00%

Capital
Accumulation

$6,515,579
$0
$0
$0
$0
$0
$0
$0
$0
$177,118

$0

5.00%

$185,974 =

$201,453

al Accumulation =

$6,717,032

Note: Do not enter any information on this sheet.
All values are derived from other sheets.

Summary
Measures of Investment Performance

Before Tax IRR
After Tax IRR
After Tax Capital Accumulation
After Tax Annual Growth Rate of Capital

Without
Financing
Err:523
Err:523
$6,717,032
3.00%

ation on this sheet.
om other sheets.

With
Financing
Err:523
Err:523
$6,717,032
3.00%