Start 1 IN 4 5 6 7 8 TV Key Assumptions Construction cost ($) ,300,000 Loan ($) 450,000 Loan interest rate 7.0% Loan term (yrs.) 8 Hangar space (sq.ft.) 22,000 Rent ($/sq.ft. per month) 1.45 Rent inflator 2.2% Operating Costs ($/yr.) 124,000 Cost inflator 2.2% Tax rate 21.0% Discount rate 8.0% Depreciation year ($) 34,000 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 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\fVariable Costs (S/flight hr.) Fixed Costs (S/vear) Base Case - Break-Even Revenue/Hou Fuel 66.00 Maintenance & repair 7,750 Fixed Costs Lubricants 6.00 Tie-down (allocated) 1,650 Total Hours Overhaul reserve 24.00 Insurance 1,150 Required Revenue/hr. Difference Total 96.00 Total 10,550 to Base Case A - 20% Higher FC Fixed Costs Operating Data Dollar Benefit/(Loss) per year Total Hours Total flight hours 255 Required Revenue/hr. B - 10% Higher VC Fixed Costs Break-Even Formula Total Hours Required Revenue/hr. Fixed Costs - [(Total Hours) x (Revenue/hr. - Variable Cost/hr.)] = 0 A + B Fixed Costs Total Hours Required Revenue/hr. 140 Flight Hours Fixed Costs Total Hours 160 Required Revenue/hr