Štart $1.00 2|3 4|5 89 10 TV Key Assumptions Construction cost ($) Loan ($) Loan interest rate Loan term (yrs.) Hangar space (sq.ft.) Rent ($/sq.ft. per month) Rent inflator Operating Costs ($/yr.) Cost inflator Таx rate Discount rate Depreciation/year ($) 1,000,000 500,000 4.8% 22,000 1.30 2.0% 140,000 2.0% 21.0% 6.5% 20,000 Cash Flows Rent Income minus: Operating Costs minus: Interest minus: Depreciation - Taxable Income minus: Taxes - Net Income minus: Principal - Net Operating Cash Flow minus: Cash Outlay at Start plus: Depreciation - Total Cash Flows Rent Income Square Footage x S1/sq.ft x 12 mon NPV IRR Note: Tax shields are the tax gains from expensing interest and depreciation. The formula is interest or depreciation expense times the tax rate 7.
Štart $1.00 2|3 4|5 89 10 TV Key Assumptions Construction cost ($) Loan ($) Loan interest rate Loan term (yrs.) Hangar space (sq.ft.) Rent ($/sq.ft. per month) Rent inflator Operating Costs ($/yr.) Cost inflator Таx rate Discount rate Depreciation/year ($) 1,000,000 500,000 4.8% 22,000 1.30 2.0% 140,000 2.0% 21.0% 6.5% 20,000 Cash Flows Rent Income minus: Operating Costs minus: Interest minus: Depreciation - Taxable Income minus: Taxes - Net Income minus: Principal - Net Operating Cash Flow minus: Cash Outlay at Start plus: Depreciation - Total Cash Flows Rent Income Square Footage x S1/sq.ft x 12 mon NPV IRR Note: Tax shields are the tax gains from expensing interest and depreciation. The formula is interest or depreciation expense times the tax rate 7.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Start
$1.00
23456
89 10 TV
Key Assumptions
Construction cost ($)
Loan ($)
1,000,000
500,000
Loan interest rate
Loan term (yrs.)
Hangar space (sq.ft.)
Rent ($/sq.ft. per month)
4.8%
22,000
1.30
Rent inflator
2.0%
Operating Costs ($/yr.)
140.000
Cost inflator
2.0%
Tax rate
21.0%
Discount rate
6.5%
Depreciation/year ($)
20,000
Cash Flows
Rent Income
Rent Income = Square Footage x S1/sq.ft x 12 months
minus: Operating Costs
minus: Interest
minus: Depreciation
= Taxable Income
minus: Taxes
= Net Income
minus: Principal
= Net Operating Cash Flow
minus: Cash Outlay at Start
plus: Depreciation
Total Cash Flows
NPV
IRR
Note: Tax shields are the tax gains from expensing interest and depreciation. The formula is interest or depreciation expense times the tax rate
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