Monthly payments on P.

V of the money and the FV

Year Earning after tax PV factor

1 $ 10,427,900.00 0.935
2 $ 9,427,900.00 0.873
3 $ 9,427,900.00 0.816
4 $ 9,427,900.00 0.762
5 $ 9,427,900.00 0.712
6 $ 9,427,900.00 0.666
7 $ 9,427,900.00 0.622
8 $ 9,427,900.00 0.582
9 $ 9,427,900.00 0.543
10 $ 9,427,900.00 0.508
11 $ 9,427,900.00 0.475
12 $ 9,427,900.00 0.444
13 $ 9,427,900.00 0.414
14 $ 9,427,900.00 0.387
15 $ 9,427,900.00 0.362
16 $ 9,427,900.00 0.339
17 $ 9,427,900.00 0.317
18 $ 9,427,900.00 0.296
19 $ 9,427,900.00 0.227
20 $ 9,427,900.00 0.258

Net PV

Capital Gain

There fore initial investment of 12.5 million will have a futur

It is also seen that even after taking into consideration the e

oney and the FV

Present value FV factor Future value

$ 9,750,086.50 1.07 $ 10,432,592.56
$ 8,230,556.70 1.145 $ 9,423,987.42
$ 7,693,166.40 1.225 $ 9,424,128.84
$ 7,184,059.80 1.311 $ 9,418,302.40
$ 6,712,664.80 1.403 $ 9,417,868.71
$ 6,278,981.40 1.501 $ 9,424,751.08
$ 5,864,153.80 1.606 $ 9,417,831.00
$ 5,487,037.80 1.718 $ 9,426,730.94
$ 5,119,349.70 1.838 $ 9,409,364.75
$ 4,789,373.20 1.967 $ 9,420,697.08
$ 4,478,252.50 2.105 $ 9,426,721.51
$ 4,185,987.60 2.252 $ 9,426,844.08
$ 3,903,150.60 2.41 $ 9,406,592.95
$ 3,648,597.30 2.579 $ 9,409,732.44
$ 3,412,899.80 2.759 $ 9,416,190.55
$ 3,196,058.10 2.952 $ 9,434,763.51
$ 2,988,644.30 3.159 $ 9,441,127.34
$ 2,790,658.40 3.38 $ 9,432,425.39
$ 2,140,133.30 3.616 $ 7,738,722.01
$ 2,432,398.20 3.87 $ 9,413,381.03

$ 100,286,210.20 Net FV $ 187,762,755.60

$ 87,476,545.40 187,762,755/240= 782344

of 12.5 million will have a future value of 87476545.40 which is a bargain even taking into account the inflation and the oppurtunity costs

taking into consideration the expenses and the cash he is earning a profit

Particular Amount Amount For second year ownwards

Initial Investment $ 12,500,000.00 Earning After tax
Add: Oppurtunity cost @7% $ 875,000.00 Less: Stamp and Reg
E.B.I.T $ 13,375,000.00 Brokerage
Add: Expenses
1. Brokerage $ 125,000.00 Net amount from 2nd
2. Property Tax (annually $ 10,000.00
3. Society Charge $ 12,000.00
4. Stamp Duty $ 750,000.00
 5. Reg fees $ 125,000.00
$ 1,022,000.00

Net EBIT $ 14,397,000.00

Less: tax @30 percent $ (3,969,100.00)
(including sec 80c and 24)
Net Investment $ 10,427,900.00

ty cost is taken as 7% as a proxy for the interest on fixed deposit

ation and the oppurtunity costs

d year ownwards
$ 10,427,900.00
$ (875,000.00)
$ (125,000.00)

$ 9,427,900.00
 In Case of Rent

Particulars Amount Amount

Initial Investment $ 360,000.00

Add: Opportunity Cost $ 25,200.00
Add: Appreciation value $ 25,200.00
Add: Brokerage $ 25,000.00
Add: social Charges $ 12,000.00
$ 87,400.00
Net Investment $ 447,400.00

Note: in case of rent the property tax and any taxes related to the house is paid by the landlord
 Calculation of pv and fv in case of the rent

Year Initial investment Pv Factor Net Present Value

1 $ 447,400.00 0.935 $ 418,319.00
2 $ 447,400.00 0.873 $ 390,580.20
3 $ 447,400.00 0.816 $ 365,078.40
4 $ 447,400.00 0.762 $ 340,918.80
5 $ 447,400.00 0.712 $ 318,548.80
6 $ 447,400.00 0.666 $ 297,968.40
7 $ 447,400.00 0.622 $ 278,282.80
8 $ 447,400.00 0.582 $ 260,386.80
9 $ 447,400.00 0.543 $ 242,938.20
y the landlord 10 $ 447,400.00 0.508 $ 227,279.20
11 $ 447,400.00 0.475 $ 212,515.00
12 $ 447,400.00 0.444 $ 198,645.60
13 $ 447,400.00 0.414 $ 185,223.60
14 $ 447,400.00 0.387 $ 173,143.80
15 $ 447,400.00 0.362 $ 161,958.80
16 $ 447,400.00 0.339 $ 151,668.60
17 $ 447,400.00 0.317 $ 141,825.80
18 $ 447,400.00 0.296 $ 132,430.40
19 $ 447,400.00 0.227 $ 101,559.80
20 $ 447,400.00 0.258 $ 115,429.20

Net PV $ 4,714,701.20

Capital gain $ 4,148,084.31

Hence capital gain on renting the house will be much less as the net investment is greater the
 Fv Factor Future value
1.07 $ 447,601.33
1.145 $ 447,214.33
1.225 $ 447,221.04
1.311 $ 446,944.55
1.403 $ 446,923.97
1.501 $ 447,250.57
1.606 $ 446,922.18
1.718 $ 447,344.52
1.838 $ 446,520.41
1.967 $ 447,058.19
2.105 $ 447,344.08
2.252 $ 447,349.89
2.41 $ 446,388.88
2.579 $ 446,537.86
2.759 $ 446,844.33
2.952 $ 447,725.71
3.159 $ 448,027.70
3.38 $ 447,614.75
3.616 $ 367,240.24
3.87 $ 446,711.00

Net FV $ 8,862,785.51

e net investment is greater then the capital gain

 Therefore NPV of the project = 105380000/20= 7199000

note PV factor = 1/(1+r)^n

0.934579439252336

where r= rate of interest (appreciation value)

n = Number of years.

Value is calculated on the amount after downpayment

EMI is calclulated by the formula [P*R*(1+R)^&n]/(1+R)^n-1

10000000*0.1025*(1+0.1025)^20/(1+0.1025)^20-1 =

Payback period that is the approx time he will get the money back

Year FV Factor Amount Cumulative Future value

1 1.07 $ 10,000,000.00 $ 10,700,000.00
2 1.145 $ 10,700,000.00 $ 12,251,500.00
3 1.225 $ 12,251,500.00 $ 15,008,087.50
4 1.311 $ 15,008,087.00 $ 19,675,602.06
5 1.403 $ 19,675,602.00 $ 27,604,869.61
6 1.501 $ 27,604,869.00 $ 41,434,908.37
7 1.606 $ 41,434,908.00 $ 66,544,462.25
8 1.718 $ 66,544,462.00 $ 114,323,385.72
9 1.838 $ 114,323,385.00 $ 210,126,381.63
10 1.967 $ 210,126,381.00 $ 413,318,591.43

In third year he is getting = 12,500,000-12,198,000 = 302,000

in third year his investment was 12198000

So 12198000 in 1 year
hence 302000 INR in 302000/12198000 = 0.02
Therefore he will get his payment by 3.02 years
 Present valu

0000/20= 7199000

Formula for pv = 1/(1+r)^n

Formula for fv = 1(1+r)^n

er downpayment

R*(1+R)^&n]/(1+R)^n-1

+0.1025)^20-1 = $ 1,194,983.00
 Present value of the builing and Future value of the building as per Jains loan amount

Year Cash flow PV factor Present value FV factor Future value

1 $ 10,000,000.00 0.935 $ 9,350,000.00 1.07 $ 10,004,500.00
2 $ 10,000,000.00 0.873 $ 8,730,000.00 1.145 $ 9,995,850.00
3 $ 10,000,000.00 0.816 $ 8,160,000.00 1.225 $ 9,996,000.00
4 $ 10,000,000.00 0.762 $ 7,620,000.00 1.311 $ 9,989,820.00
5 $ 10,000,000.00 0.712 $ 7,120,000.00 1.403 $ 9,989,360.00
6 $ 10,000,000.00 0.666 $ 6,660,000.00 1.501 $ 9,996,660.00
7 $ 10,000,000.00 0.622 $ 6,220,000.00 1.606 $ 9,989,320.00
8 $ 10,000,000.00 0.582 $ 5,820,000.00 1.718 $ 9,998,760.00
9 $ 10,000,000.00 0.543 $ 5,430,000.00 1.838 $ 9,980,340.00
10 $ 10,000,000.00 0.508 $ 5,080,000.00 1.967 $ 9,992,360.00
11 $ 10,000,000.00 0.475 $ 4,750,000.00 2.105 $ 9,998,750.00
12 $ 10,000,000.00 0.444 $ 4,440,000.00 2.252 $ 9,998,880.00
13 $ 10,000,000.00 0.414 $ 4,140,000.00 2.41 $ 9,977,400.00
14 $ 10,000,000.00 0.387 $ 3,870,000.00 2.579 $ 9,980,730.00
15 $ 10,000,000.00 0.362 $ 3,620,000.00 2.759 $ 9,987,580.00
16 $ 10,000,000.00 0.339 $ 3,390,000.00 2.952 $ 10,007,280.00
17 $ 10,000,000.00 0.317 $ 3,170,000.00 3.159 $ 10,014,030.00
18 $ 10,000,000.00 0.296 $ 2,960,000.00 3.38 $ 10,004,800.00
19 $ 10,000,000.00 0.227 $ 2,270,000.00 3.616 $ 8,208,320.00
20 $ 10,000,000.00 0.258 $ 2,580,000.00 3.87 $ 9,984,600.00
$ -
Total present value of the proj $ 105,380,000.00 Net FV $ 198,095,340.00
an amount

Payment made on each year net cash in hand Interest rate Amount
$ 59,749.00 $ 9,944,751.00 0.1025 $ 1,019,336.98
$ 59,749.00 $ 9,936,101.00 0.1025 $ 1,018,450.35
$ 59,749.00 $ 9,936,251.00 0.1025 $ 1,018,465.73
$ 59,749.00 $ 9,930,071.00 0.1025 $ 1,017,832.28
$ 59,749.00 $ 9,929,611.00 0.1025 $ 1,017,785.13
$ 59,749.00 $ 9,936,911.00 0.1025 $ 1,018,533.38
$ 59,749.00 $ 9,929,571.00 0.1025 $ 1,017,781.03
$ 59,749.00 $ 9,939,011.00 0.1025 $ 1,018,748.63
$ 59,749.00 $ 9,920,591.00 0.1025 $ 1,016,860.58
$ 59,749.00 $ 9,932,611.00 0.1025 $ 1,018,092.63
$ 59,749.00 $ 9,939,001.00 0.1025 $ 1,018,747.60
$ 59,749.00 $ 9,939,131.00 0.1025 $ 1,018,760.93
$ 59,749.00 $ 9,917,651.00 0.1025 $ 1,016,559.23
$ 59,749.00 $ 9,920,981.00 0.1025 $ 1,016,900.55
$ 59,749.00 $ 9,927,831.00 0.1025 $ 1,017,602.68
$ 59,749.00 $ 9,947,531.00 0.1025 $ 1,019,621.93
$ 59,749.00 $ 9,954,281.00 0.1025 $ 1,020,313.80
$ 59,749.00 $ 9,945,051.00 0.1025 $ 1,019,367.73
$ 59,749.00 $ 8,148,571.00 0.1025 $ 835,228.53
$ 59,749.00 $ 9,924,851.00 0.1025 $ 1,017,297.23

$ 1,194,980.00 $ 20,182,286.90