Question: DCF In-Class Practice Property Assumptions Purchase Price: Year 1 Potential Gross Income (PGI): $4,000,000 $540,000 PGI annual growth rate: 3% Annual Vacancy and Credit

DCF In-Class Practice Property Assumptions Purchase Price: Year 1 Potential Gross Income

DCF In-Class Practice Property Assumptions Purchase Price: Year 1 Potential Gross Income (PGI): $4,000,000 $540,000 PGI annual growth rate: 3% Annual Vacancy and Credit Loss (VCL): 10% Over next 6yrs. Year 1 operating expenses (OER): (Oper. Expense Ratio) OPEX annual growth rate: 35% 2% Sales Price: Capitalize 6th yr. NOI at Terminal Cap Rate of 9% Anticipated holding period Maximum loan-to-value (LTV) ratio: Interest Rate (Loan): Amortization Period: Payments per year: Investors' Hurdle Rate (unleveraged) 1. What is the Loan Amount using the LTV ratio? 3 years 70% 5% 30 years 12 15%

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