Build a pro forma for the Alison Green property, using a similar structure as the one in Exhibit 5, but assuming that the building is bought with 100% equity. Calculate the equity cashflows after tax (EATCF) and equity IRR. Make sure to account for both income and capital gains taxes. 

• 3% annual increases in cash flow from operations or net operating income
• Vacancy rate is 5% throughout the holding period
• Ordinary tax rate of 39.6%
• Capital gain tax rate of 20%
• tax rate of 25% on that part of the gain on sale that related to depreciation
• Clients can fully use any tax losses as they occurred aganist other income, and tax laws would not change again during the holding period

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Exhibit 5 Alison Green Projected Cash Flow ($000s) Net Operating Income -Lease Payments -Financing BEFORE TAX CASH FLOW Assumptions 3% growth 0 1 2 3 4 5 6 7 8 9 10 $1,450.00 $1,493.50 $1,538.31 $1,584.45 $1,631.99 $1,680.95 $1,731.38 $1,783.32 $1,836.82 $1,891.92 (802.06) (802.06) (802.06) 647.94 691.44 736.25 (802.06) (802.06) (802.06) (802.06) (802.06) (802.06) 782.39 829.93 878.89 929.32 981.26 1,034.76 (802.06) 1,089.86 Cash Flow from Operations or Net Operating Income 1,493.50 - Interest +Reserve 15,000.0 -Depreciation Taxable Income 27.5 years -Tax Payable @ 39.6% tax rate 25.00 (545.45) 374.03 (148.12) 1,450.00 1,538.31 ($555.51) ($545.47) ($535.01) 25.00 25.00 (545.45) (545.45) 427.58 482.84 (169.32) (191.20) 1,584.45 ($524.13) 25.00 (545.45) 539.87 (213.79) 1,631.99 ($512.81) 25.00 (545.45) (545.45) 598.72 659.47 (237.09) (261.15) 1,680.95 ($501.03) 25.00 1,731.38 ($488.76) 25.00 (545.45) 722.16 (285.97) 1,783.32 1,836.82 ($476.00) ($462.71) 25.00 (545.45) (545.45) 786.86 853.65 (311.60) (338.04) 1,891.92 ($448.89) 25.00 25.00 (545.45) 922.58 (365.34) BEFORE TAX CASH FLOW -Tax Payable @39.6% AFTER TAX CASH FLOW 647.94 (148.12) 499.82 691.44 736.25 (169.32) (191.20) 522.12 545.04 782.39 829.93 929.32 (213.79) (237.09) (261.15) (285.97) 568.61 592.83 617.74 643.34 878.89 981.26 1,034.76 (311.60) 669.66 1,089.86 (338.04) 696.71 (365.34) 724.52 -Equity in & Net Cash from Sale ($6,000) ($6,000) $10,856.61 TOTAL RETURN ($6,000) $499.82 $522.12 $545.04 $568.61 $592.83 $617.74 $643.34 $669.66 $696.71 $11,581.13 Purchase Price +Capital Exp. -Depreciation Net Book Value Land Value Depreciable Base $20,000.00 $250.00 SALES PRICE NET BOOK VALUE $24,000.00 ($14,795.45) ($5,454.55) $14,795.45 GAIN ON SALE $9,204.55 Depreciation taken $5,454.55 $ 5,000.00 $15,000.00 Taxes at 25% Remaining Gain Taxes at 20% Total Taxes $1,363.64 $3,750.00 $750.00 $2,113.64 Amortization Schedule (monthly payments--annualized) Year end balance Annual debt service 4.000% Amortization Interest 30 SALES PRICE -Mortgage Balance BTCF From Sale -Income Taxes Net Cash From Sale $24,000.00 ($11,029.75) $12,970.25 ($2,113.64) $10,856.61 NET PRESENT VALUE AT 10% INTERNAL RATE OF RETURN $1,803.59 13.91% 0 1 2 3 4 5 6 7 8 9 10 $14,000.00 $13,753.45 ($802.06) $246.55 $13,496.87 $13,229.82 ($802.06) ($802.06) $256.59 $267.04 $555.51 $545.47 $535.01 $524.13 $12,951.90 $12,662.65 $12,361.62 $12,048.33 $11,722.27 $11,382.92 ($802.06) ($802.06) ($802.06) ($802.06) ($802.06) ($802.06) $277.92 $289.25 $301.03 $313.30 $326.06 $512.81 $501.03 $488.76 $11,029.75 ($802.06) $339.34 $353.17 $476.00 $462.71 $448.89 Exhibit 5 Alison Green Projected Cash Flow ($000s) Net Operating Income -Lease Payments -Financing BEFORE TAX CASH FLOW Assumptions 3% growth 0 1 2 3 4 5 6 7 8 9 10 $1,450.00 $1,493.50 $1,538.31 $1,584.45 $1,631.99 $1,680.95 $1,731.38 $1,783.32 $1,836.82 $1,891.92 (802.06) (802.06) (802.06) 647.94 691.44 736.25 (802.06) (802.06) (802.06) (802.06) (802.06) (802.06) 782.39 829.93 878.89 929.32 981.26 1,034.76 (802.06) 1,089.86 Cash Flow from Operations or Net Operating Income 1,493.50 - Interest +Reserve 15,000.0 -Depreciation Taxable Income 27.5 years -Tax Payable @ 39.6% tax rate 25.00 (545.45) 374.03 (148.12) 1,450.00 1,538.31 ($555.51) ($545.47) ($535.01) 25.00 25.00 (545.45) (545.45) 427.58 482.84 (169.32) (191.20) 1,584.45 ($524.13) 25.00 (545.45) 539.87 (213.79) 1,631.99 ($512.81) 25.00 (545.45) (545.45) 598.72 659.47 (237.09) (261.15) 1,680.95 ($501.03) 25.00 1,731.38 ($488.76) 25.00 (545.45) 722.16 (285.97) 1,783.32 1,836.82 ($476.00) ($462.71) 25.00 (545.45) (545.45) 786.86 853.65 (311.60) (338.04) 1,891.92 ($448.89) 25.00 25.00 (545.45) 922.58 (365.34) BEFORE TAX CASH FLOW -Tax Payable @39.6% AFTER TAX CASH FLOW 647.94 (148.12) 499.82 691.44 736.25 (169.32) (191.20) 522.12 545.04 782.39 829.93 929.32 (213.79) (237.09) (261.15) (285.97) 568.61 592.83 617.74 643.34 878.89 981.26 1,034.76 (311.60) 669.66 1,089.86 (338.04) 696.71 (365.34) 724.52 -Equity in & Net Cash from Sale ($6,000) ($6,000) $10,856.61 TOTAL RETURN ($6,000) $499.82 $522.12 $545.04 $568.61 $592.83 $617.74 $643.34 $669.66 $696.71 $11,581.13 Purchase Price +Capital Exp. -Depreciation Net Book Value Land Value Depreciable Base $20,000.00 $250.00 SALES PRICE NET BOOK VALUE $24,000.00 ($14,795.45) ($5,454.55) $14,795.45 GAIN ON SALE $9,204.55 Depreciation taken $5,454.55 $ 5,000.00 $15,000.00 Taxes at 25% Remaining Gain Taxes at 20% Total Taxes $1,363.64 $3,750.00 $750.00 $2,113.64 Amortization Schedule (monthly payments--annualized) Year end balance Annual debt service 4.000% Amortization Interest 30 SALES PRICE -Mortgage Balance BTCF From Sale -Income Taxes Net Cash From Sale $24,000.00 ($11,029.75) $12,970.25 ($2,113.64) $10,856.61 NET PRESENT VALUE AT 10% INTERNAL RATE OF RETURN $1,803.59 13.91% 0 1 2 3 4 5 6 7 8 9 10 $14,000.00 $13,753.45 ($802.06) $246.55 $13,496.87 $13,229.82 ($802.06) ($802.06) $256.59 $267.04 $555.51 $545.47 $535.01 $524.13 $12,951.90 $12,662.65 $12,361.62 $12,048.33 $11,722.27 $11,382.92 ($802.06) ($802.06) ($802.06) ($802.06) ($802.06) ($802.06) $277.92 $289.25 $301.03 $313.30 $326.06 $512.81 $501.03 $488.76 $11,029.75 ($802.06) $339.34 $353.17 $476.00 $462.71 $448.89