Homework Help is Here – Start Your Trial Now!
Business
Accounting
3. Indicate on this sheet how you know that this proforma has positive or negative financial leverage and positive or negative operating leverage. Show your work. Before tax cash flows Office Example GENERAL DATA Purchase Price BUILDING DATA Loan % Loan Amount $9,000,000.00 75.00% Bldg RSF 100000 Reversion Data Going Out OE/RSF $8.00 Cap Rate 10.50% $6,750,000.00 Rents PSF $18.00 Interest Rate/yr 9.50% Monthly Constant (Rm) 0.0079167 INITIAL EQUITY Investors Discount Rate Term/years 25 Price $9,000,000.00 15.00% Term/months 300 Loan $6,750,000.00 Monthly PMT $58,975 Initial Investment $2,250,000.00 Annual DS $707,694 Before Tax CASH FLOWS Year 1 Potential Gross Income $1,800,000 Year 2 $1,890,000 Year 3 $1,984,500 Year 4 $2,083,725 Year 5 $2,187,911 Year 6 $2,297,307 Vacancy & Credit Losses Other Income Effective Gross Income Operating Expenses Net Operating Income Debt Service $90,000 $94,500 $0 Before Tax Cash Flow $0 $1,710,000 $1,795,500 $800,000 $832,000 $910,000 $963,500 -$707,694 -$707,694 $202,306 $255,806 $99,225 $0 $104,186 $0 $109,396 $0 $114,865 $0 $1,885,275 $865,280 $1,979,539 $899,891 $2,078,516 $2,182,441 $935,887 $973,322 $1,019,995 $1,079,648 $1,142,629 $1,209,119 -$707,694 -$707,694 -$707,694 $312,301 $371,953 $434,935 Reversion Value less: costs of sale $9,176,190 $9,714,238 -$734,095 -$777,139 $10,282,358 $10,882,179 $11,515,420 -$822,589 -$870,574 -$921,234 Remaining Loan Balance -$6,680,585 $6,604,280 Net Sale Proceeds $1,761,510 $2,332,819 -$6,520,403 $2,939,366 -$6,428,201 -$6,326,848 $3,583,404 $4,267,339

3. Indicate on this sheet how you know that this proforma has positive or negative financial leverage and positive or negative operating leverage. Show your work. Before tax cash flows Office Example GENERAL DATA Purchase Price BUILDING DATA Loan % Loan Amount $9,000,000.00 75.00% Bldg RSF 100000 Reversion Data Going Out OE/RSF $8.00 Cap Rate 10.50% $6,750,000.00 Rents PSF $18.00 Interest Rate/yr 9.50% Monthly Constant (Rm) 0.0079167 INITIAL EQUITY Investors Discount Rate Term/years 25 Price $9,000,000.00 15.00% Term/months 300 Loan $6,750,000.00 Monthly PMT $58,975 Initial Investment $2,250,000.00 Annual DS $707,694 Before Tax CASH FLOWS Year 1 Potential Gross Income $1,800,000 Year 2 $1,890,000 Year 3 $1,984,500 Year 4 $2,083,725 Year 5 $2,187,911 Year 6 $2,297,307 Vacancy & Credit Losses Other Income Effective Gross Income Operating Expenses Net Operating Income Debt Service $90,000 $94,500 $0 Before Tax Cash Flow $0 $1,710,000 $1,795,500 $800,000 $832,000 $910,000 $963,500 -$707,694 -$707,694 $202,306 $255,806 $99,225 $0 $104,186 $0 $109,396 $0 $114,865 $0 $1,885,275 $865,280 $1,979,539 $899,891 $2,078,516 $2,182,441 $935,887 $973,322 $1,019,995 $1,079,648 $1,142,629 $1,209,119 -$707,694 -$707,694 -$707,694 $312,301 $371,953 $434,935 Reversion Value less: costs of sale $9,176,190 $9,714,238 -$734,095 -$777,139 $10,282,358 $10,882,179 $11,515,420 -$822,589 -$870,574 -$921,234 Remaining Loan Balance -$6,680,585 $6,604,280 Net Sale Proceeds $1,761,510 $2,332,819 -$6,520,403 $2,939,366 -$6,428,201 -$6,326,848 $3,583,404 $4,267,339

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
3. Indicate on this sheet how you know that this proforma has positive or negative financial leverage and positive or negative operating leverage. Show your work. Before tax cash flows Office Example GENERAL DATA BUILDING DATA Purchase Price Loan % $9,000,000.00 75.00% Bldg RSF 100000 Reversion Data Going Out OE/RSF $8.00 Cap Rate 10.50% Loan Amount $6,750,000.00 Rents PSF $18.00 Interest Rate/yr 9.50% Monthly Constant (Rm) 0.0079167 INITIAL EQUITY Investors Discount Rate Term/years 25 Price $9,000,000.00 15.00% Term/months 300 Loan $6,750,000.00 Monthly PMT $58,975 Initial Investment $2,250,000.00 Annual DS $707,694 Before Tax CASH FLOWS Potential Gross Income Year 1 $1,800,000 Year 2 $1,890,000 Year 3 $1,984,500 Year 4 $2,083,725 Year 5 $2,187,911 Year 6 $2,297,307 Vacancy & Credit Losses Other Income Effective Gross Income Operating Expenses Net Operating Income $90,000 $94,500 $0 $0 $99,225 $0 $104,186 $0 $109,396 $0 $114,865 $0 $1,710,000 $1,795,500 $1,885,275 $1,979,539 $2,078,516 $2,182,441 Debt Service Before Tax Cash Flow $800,000 $910,000 -$707,694 -$707,694 $202,306 $255,806 $832,000 $865,280 $899,891 $935,887 $973,322 $963,500 $1,019,995 $1,079,648 $1,142,629 $1,209,119 -$707,694 -$707,694 -$707,694 $312,301 $371,953 $434,935 Reversion Value less: costs of sale $9,176,190 $9,714,238 -$734,095 -$777,139 $10,282,358 $10,882,179 $11,515,420 -$822,589 -$870,574 -$921,234 Remaining Loan Balance Net Sale Proceeds -$6,680,585 $6,604,280 $1,761,510 $2,332,819 -$6,520,403 -$6,428,201 -$6,326,848 $2,939,366 $3,583,404 $4,267,339
Transcribed Image Text:3. Indicate on this sheet how you know that this proforma has positive or negative financial leverage and positive or negative operating leverage. Show your work. Before tax cash flows Office Example GENERAL DATA BUILDING DATA Purchase Price Loan % $9,000,000.00 75.00% Bldg RSF 100000 Reversion Data Going Out OE/RSF $8.00 Cap Rate 10.50% Loan Amount $6,750,000.00 Rents PSF $18.00 Interest Rate/yr 9.50% Monthly Constant (Rm) 0.0079167 INITIAL EQUITY Investors Discount Rate Term/years 25 Price $9,000,000.00 15.00% Term/months 300 Loan $6,750,000.00 Monthly PMT $58,975 Initial Investment $2,250,000.00 Annual DS $707,694 Before Tax CASH FLOWS Potential Gross Income Year 1 $1,800,000 Year 2 $1,890,000 Year 3 $1,984,500 Year 4 $2,083,725 Year 5 $2,187,911 Year 6 $2,297,307 Vacancy & Credit Losses Other Income Effective Gross Income Operating Expenses Net Operating Income $90,000 $94,500 $0 $0 $99,225 $0 $104,186 $0 $109,396 $0 $114,865 $0 $1,710,000 $1,795,500 $1,885,275 $1,979,539 $2,078,516 $2,182,441 Debt Service Before Tax Cash Flow $800,000 $910,000 -$707,694 -$707,694 $202,306 $255,806 $832,000 $865,280 $899,891 $935,887 $973,322 $963,500 $1,019,995 $1,079,648 $1,142,629 $1,209,119 -$707,694 -$707,694 -$707,694 $312,301 $371,953 $434,935 Reversion Value less: costs of sale $9,176,190 $9,714,238 -$734,095 -$777,139 $10,282,358 $10,882,179 $11,515,420 -$822,589 -$870,574 -$921,234 Remaining Loan Balance Net Sale Proceeds -$6,680,585 $6,604,280 $1,761,510 $2,332,819 -$6,520,403 -$6,428,201 -$6,326,848 $2,939,366 $3,583,404 $4,267,339
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 4 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Rate Of Return
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS