Angus Catwright Case

Topics: Net present value, Cash flow, Rate of return Pages: 4 (1696 words) Published: May 6, 2011
Angus Cartwright III Case

Exhibit 1 gives us an overview of each of the properties, such as the gross purchase price, the depreciable base, estimated sales prices, the amount of the first mortgage and so forth. These assumptions are significant to the calculations used throughout the entire case.

In Exhibit 2 we find the first-year project setups. This is important information because we can see how much each real estate property will cost in the first year. This information is also useful in setting up the projected cash flow analysis for each of the four properties. Alison Green had the greatest before tax cash flow with $434,306.53, Ivy Terrace came in second with before tax cash flows of 336,130.99, 900 Stony Walk came in third with before tax cash flows of $331,148.84 and The Fowler Building had the least before tax cash flows in its first year with $90,325.30.

Exhibit 3 tells us the purchase and operating comparables. These comparables give us an easier way to compare purchase and operating variables among the four properties. However, since some of the properties are in square footage and others are in total units, this information is not helpful in comparing all four properties at once. 900 Stony Walk brings in the most average monthly rents with $145,166.67, and The Fowler Building brings in the least average monthly rents with $106,250.00.

Exhibit 4 tells us the break-even analysis. This is an excellent indicator of risk of the project. Alison Green has the least break-even occupancy with 64.84%, which is good because it means that the building only needs to be occupied with 64.84% of people for the owner to Break-even. On the other hand, The Fowler building has the highest break-even occupancy level with a percentage 85.92%. This means that the Fowler Building is a lot more risky than Alison Green.

Exhibit 5 tells us the expected cash flows for each property, and through the expected cash flows we find the Net Present Value and the...
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