# SJU Valuation analysis problem 3.docx - Valuation Analysis...

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Valuation Analysis Problem – Enter all answers on this page and attach your cash flow Underwriting information: 300 unit apartment building 1,500 per month average rent 7% vacancy 38% total operating expense ratio Replacement Reserves of \$250 per unit per year 3% growth rate Purchase price is \$50 million Exit cap rate is 6.5% Sales costs are 2% Unlevered discount rate is 7% Assume 5 year holding period Part 1 - Prepare 5 year pro forma operating statement Annual Cash FlowsComputationAmt Y1 Net Cash Inflows Rent300*1500*12*(1-0.07)5,022,000.00 Operating Exp300*1500*12*(1-0.07)*38%1,908,360.00 Y1 Net Cash Inflows3,113,640.00 Growth3% Purchase Price50,000,000.00 Exit cap rate is6.50% terminal Cash Flows Exit Price50000000*106.5%53,250,000.00 Sales Cost53250000*2%1,065,000.00 Net Terminal Cash Flows52,185,000.00 ParticularsY1Y2Y3Y4Y5 Rent5,022,000.005,172,660.005,327,839.805,487,674.995,652,305.24 Less:Operating Ex 1,908,360.001,965,610.802,024,579.122,085,316.502,147,875.99 Net CashInflows3,113,640.003,207,049.203,303,260.683,402,358.503,504,429.25
What is cap rate on the purchase price?
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Determine the sales price at the end of year 5

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