The objective is to create a pro forma (cash flow projection) for a proposed land development based on the following set of project assumptions.

Assumptions

• Gross land: 75 acres
• Purchase price: $9.1 million, paid in year 0
• Net developable area: 55 acres
• Total lots: 235
• Lot size: 6500sf
• Projected absorption: 71 lots per year
• Revenue per lot: $79,000 in year 1, increases by 5.5% thereafter
• Required return: 20%
• Development costs
  • Grading: $271,000 total, incurred proportionately in year prior to anticipated lot sales
  • Paving: $580,000 total, incurred proportionately in year prior to anticipated lot sales
  • Storm sewer: $307,000 total, incurred proportionately in year prior to anticipated lot sales
  • Water: $232,000 total, incurred proportionately in year prior to anticipated lot sales
  • Sanitary sewer: $0.13 per net usable square foot, incurred proportionately in year prior to anticipated lot sales
  • Off-site street paving: $11,000 per net developable acre, incurred proportionately in year prior to anticipated lot sales
  • Fees and permits: $7,200 per lot, incurred during the year of the anticipated lot sales
  • School fees: $1,700 per lot, incurred during the year of the anticipated lot sales
  • Indirect land development: 9% of direct costs (excludes fees, permits, marketing & admin); 75% in year 0, 25% in year 1
  • Marketing: 4% of expected revenue, incurred proportionately in year prior to anticipated lot sales
  • Administrative: 5% of expected revenue, incurred proportionately during the year of anticipated lot sales