part 1

NPV
Option 1 $110 per SF
Initial outlay (110*60390)
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5

tenant 1
inflows
-6642900

0
603900
603900
603900
603900
603900

outflows
(operating costs )
205326
209432.52
213621.1704
217893.593808
222251.46568416

Conclusion: The investment is not viable

(selling expenses)

PGI
12078
12078
12078
12078
12078

386496
382389.48
378200.8296
373928.406192
369570.53431584

Year 0
Year 1
Year 2
year 3
year 4
year 5

Year 0
Year 1
Year 2
year 3
year 4
year 5
IRR does not exist in this case

This is because NPV is less than zero

(v&c)
19324.8
19119.474
37820.08296
37392.8406192
36957.053431584

Net flows

net income
367171.2
363270.006
340380.74664
336535.5655728
332613.480884256

PV at 10%

-6642900
-6642900
538221.6326025
489292.393275
569087.2255068
470320.02108
552857.043410942 415369.679497326
584754.065950627 399394.895123712
578333.333896761 359099.498852389
NPV
-4509423.51217157

IRR
Net flows

PV at 1%

-6642900
-6642900
470320.02108 465663.387207921
415369.679497326 407185.255854648
399394.895123712 387648.750339669
359099.498852389 345087.560110775
-4509423.51217157 -4290561.74271836
NPV
-9327876.78920535

tenant 2
inflows
0
241258.05
248495.7915
255950.665245
263629.18520235
271538.060758421

outflows
(operating costs)
152711.2125
155765.43675
158880.745485
160696.5254334
163910.455942068

(Selling expenses)

PGI

4825.161
83721.6765
4969.91583
87760.43892
5119.0133049
91950.9064551
5272.583704047 97660.076064903
5430.7612151684 102196.843601184

(v&c)

net income

4186.083825
79535.592675
4388.021946
83372.416974
4597.545322755 87353.361132345
4883.0038032452 92777.0722616579
10219.6843601184 91977.1592410657

tenenat 3
inflows
0
571289.4
623224.8
623224.8
675160.2
675160.2

outflows
(operating costs)
0
220725.45
225139.959
229642.75818
234235.6133436
238920.325610472

(selling expenses)

PGI

(v&c)

Net income

11425.788
339138.162
16956.9081
322181.2539
12464.496
385620.345
19281.01725
366339.32775
12464.496
381117.54582
19055.877291
362061.668529
13503.204
427421.3826564
21371.06913282 406050.31352358
13503.204 422736.670389528 21136.8335194764 401599.836870052

Part 2
period
rate
loan amount
annual interest expenses
A(1+r/compounding periods)^n*compounding periods

Year 1
year2
year 3
year 4
year 5

Year 0
Year 1
Year 2
year 3
year 4
year 5

Year 0
Year 1
Year 2
year 3
year 4
year 5

IRR does not exist since NPV is negative

30 years
7% compounded monthly
70% of (60390*110)

principal
4650030
4986181
5346632
5733140
6147589

loan total formula

4650030(1+0.07/12)^12
4986181(1+0.07/12)^13
5346632(1+0.07/12)^14
5733140(1+0.07/12)^15
4650030(1+0.07/12)^16

amount
4986180.6687
5346632.02449
5733140.02728
6147588.6906
6591998.20881

New NPV
net flows
Net flows

Interest expense
0
336150.7
360451
386508
414448.7
444409.2

-6642900
581744.31
612828.72
594653.71
625734.76
617498.56
NPV

-6642900
245593.61
252377.72
208145.71
211286.06
173089.36
-5552407.54

IRR
net flows
Net flows

Interest expense
-6642900
581744.31
612828.72
594653.71
625734.76
617498.56

NPV

0
336150.7
360451
386508
414448.7
444409.2

-6642900
245593.61
252377.72
208145.71
211286.06
173089.36
-5552407.54

4650030

interest for the year

336150.6687
360451.02449
386508.02728
414448.690599999
444409.20881

A.
ARM 1
Initial inter
margin
profit

4%
2.50%
1.500%

ARM 1
principal
Year 1
year2
year 3
year 4
year 5

603900
1028498
2055009
3675583.36528157
6728826.47067016

ARM II
principal
Year 1
year2
year 3
year 4
year 5

603900
1434589.85905038
3605081.27965015
9618659.24854869
27353757.0144411

ARM III

principal
principal
Year 1
year2
year 3

603900
1255793.13977187
2718683.19109524

year 4
year 5

6141130.48426355
14507814.1364658

B. Effective interest rate

ARMI
ARMII
ARMIII

Year 1
Year 2
Year 3
Year 4
Year 5

year 1
year 2
year 3
year 4
year 5

C.
NPV
ARM 1
Balance PV at 10%
417744.9 379768.090909091
1803700 1490661.15702479
3743063 2812218.63260706
6915440 4723338.56976982
13101450 8134969.66799337
NPV
17540956.1183041

ARM II PV at 10%
11653.5 10594.0909090909
3087719 2551833.88429752
8364221 6284163.03531179
24235235 16552991.5989345
75447396 46846896.945688
NPV
72246479.5551409

ARM 111 PV at 10%

year 1
year 2
year 3
year 4
year 5

136212.3
2193443
4972409
11809268
29461279

123829.363636364
1812762.80991736
3735844.47783621
8065888.94201216
18293136.3356949

NPV

32031461.929097

IRR

Year 1
Year 2
Year 3
Year 4
Year 5

year 1
year 2
year 3
year 4
year 5

ARM 1
Balance PV at 99%
417744.9 379768.090909091
1803700 1252569.44444444
3743063 474971.889827157
6915440 440968.443818412
13101450 419811.162218257
NPV
2968089.03121736

ARM II PV at 10%
11653.5 5856.0301507538
3087719 779707.330622964
8364221 1061368.68529918
24235235 1545378.72695353
75447396 2417568.97145744
NPV
5809879.74448386

ARM 111 PV at 10%

year 1
year 2
year 3
year 4
year 5

136212.3
2193443
4972409
11809268
29461279
NPV
No IRR

68448.391959799
553885.760460594
630968.407350761
753027.216286248
944030.910885919
2950360.68694332

Interest rates
ARM II

ARM III
6.50%
2.50%
4.00%

5.50%
2%
3.50%

amount
Inflows (margin)
interest for the year
1028498.42457852
842343.357244861
424598.424578522
1789334.72233604
2564536.46886722
760836.722336045
3675583.36528157
5363637.69507337
1620574.36528157
6728826.47067016
9968683.5928791
3053243.10538859
12619928.7101227
18992551.9995274
5891102.23945255

amount
inflows
interest for the year
1434589.85905038
842343.357244861
830689.859050377
3605081.27965015
5258210.12655868
2170491.42059977
9618659.24854869
14377798.8415701
6013577.96889854
27353757.0144411
41970332.4544951
17735097.7658924
83257446.8382716
131351085.42803
55903689.8238305

amount
Inflows
interest for the year
amount
interest for the year
1255793.13977187
788105.448910848
651893.139771866
2718683.19109524
3656333.26899694
1462890.05132338
6141130.48426355
8394856.78808599
3422447.2931683

14507814.1364658
35932719.9089945
Nominal rate/n

20175951.3834319
50886185.1747014

8366683.65220226
21424905.7725287
n=1

4%
6.50%
5.50%

Balance
417744.932666339
1803699.74653118
3743063.3297918
6915440.48749051
13101449.7600749

11653.4981944839
3087718.7059589
8364220.87267159
24235234.6886027
75447395.6041991

136212.309138983
2193443.21767356
4972409.49491769

11809267.7312296
29461279.4021727