Angus Cartwright: Financial Analysis

Good Essays
Q1. What do the calculations in the various exhibits tell us? How valuable are they? What assumptions are inherent in each calculation? Which assumptions should we question and why?
The calculations in the various exhibits paint a very detailed financial picture of the subject properties. They are extremely valuable because they account for IRR, NPV, cash on cash return, tax effects, and much more. They allow an investor to account for many variables and assumptions relating to a given property.
There are several assumptions inherent in each calculation that may alter the actual returns of the investment. One assumption is the purchase and sale price, along with the cash flow from operations. Even though the broker may claim the property can be purchased for a certain price below asking, this may not necessarily be true. The gross incomes are another assumption that will alter the predicted outcomes if they turn out to be incorrect. The tax rates are also being assumed. Depending on who the investor is, the after tax profits will differ. Another assumption is the growth rates being applied to NOI along with occupancy rates. If one of the property’s vacancy rates drop below expected, and rents aren’t increased in a particular period, the IRR will be affected.
I personally believe all assumptions need to be questioned and verified – every source of income, expense, and price paid. The biggest assumptions that need to be questioned are the purchase and sale prices for each property. Cap rates need to be compared to other property transactions in the same market to determine if the going in cap rate is accurate or close. Depending on the property chosen, the sale price may account for a large portion of the future cash flows, and assuming a higher sale price will hinder IRR.

Q2. Using the method for financial analysis, employed by Cartwright for Allison Green, and assuming the figures given in the case, what are the financial returns for the other three

You May Also Find These Documents Helpful

  • Good Essays

    Angus Cartwright Jr.

    • 483 Words
    • 2 Pages

    Angus Cartwright Jr. Case Write Up Introduction It was 1995. Mr. Angus Cartwright, the financial advisor based in Arlington, Virginia had to make recommendations to his two clients: John DeRight and Judy DeRight, who both require 12% return on investment but different types of investment in their different life stages. The four properties that Cartwright was looking at are: 1) Alison Green, an existing garden apartment based in Montgomery County, Maryland; 2) 900 Stony building, an existing 5 story…

    • 483 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Angus Cartwright III Throughout the country, home prices are at an all-time low so what better time to purchase the correct investment property for you. When purchasing an investment property, making sure you get maximum return is important since your cash-flow depends on it. In the reading “Angus Cartwright III,” Angus himself is a well-known investment advisor, after his father. In Arlington, Virginia there is the DeRight family, which is a very wealthy group that has two family members looking…

    • 1042 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Background – People Angus Cartwright III was an investment advisor based in Arlington, Virginia which main role in this particular scenario was to act as the intermediary between the DeRight brothers and potential local real estate properties. There was history already established between the DeRight and Cartwright family as they had been involved in business in the past, and there was full confidence of Angus expertise on arriving to an adequate deal. Cartwright had fully prepared a detailed financial…

    • 1499 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    * M.P.S in Real Estate, Class of ‘12 Cornell University, NY, USA * B.E. in Civil Engineering, Class of '07 Anna University, Chennai, India Talk: +1 - 949-385-0403 Write: vs328@cornell.edu Principles of Real Estate Development – HA6620 - Angus Cartwright / Assignment 4 John DeRight & Judy DeRight both members of the long standing DeRight family based in Arlington, Virginia are looking to diversify their portfolio of investments and are contemplating investing in real estate to achieve their…

    • 1434 Words
    • 6 Pages
    Powerful Essays
  • Powerful Essays

    RES 9776 – Spring 2015 Real Estate Finance Professor: Stephen J. Pearlman Case Study - Angus Cartwright III Joonho Kim Yan Chen Qinqin (Renee) Yang Jae Paik Contents I. Case Overview 2 II. Analysis and Assumptions 2 III. Financial Analysis 4 IV. Recommendations Reasoning 5 Appendix 6 Exhibit 5 Exhibit 8 I. Case Overview Angus Cartwright III, an investment advisor, was asked to provide investment advisory services for two clients…

    • 1478 Words
    • 7 Pages
    Powerful Essays
  • Satisfactory Essays

    Word Doc

    • 598 Words
    • 3 Pages

    : Describe the role internet marketing has within a modern marketing context. P2: Describe how selected organisations use internet marketing P3: Explain the benefits to customers of a business using internet marketing Unit Content L1 & L2: Marketing: increased integration of marketing mix (4 Ps) and extended mix (7 Ps); relationship marketing; importance of identification of new product and market development opportunities; modern information and communications technologies (ICTs); strategies…

    • 598 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Word Doc

    • 335 Words
    • 2 Pages

    use of dizzying camera angles, ridiculous choreography, distracting piano playing in the background and aggressive yelling from the coach and Billy’s dad, convey Billy sense of pressure and confusion. The knock out marks his failure and the coach’s words, “You are a disgrace to this gym and to these boxing gloves” states the reality that Billy does not belong to his father’s world of boxing. With Mrs Wilkinson’s command to her students “feel the music” in the background, Billy transitions from punching…

    • 335 Words
    • 2 Pages
    Good Essays
  • Satisfactory Essays

    Word Doc Help

    • 1161 Words
    • 5 Pages

    Valued Customer 1111 Huntington Drive, Greensboro, NC 27494 (336) 555-4321 Helpers@CDRC.org Valued Customer 1111 Huntington Drive, Greensboro, NC 27494 (336) 555-4321 Helpers@CDRC.org 9/28/2012 Michael Aucamp 31 Oakmont Circle Grove City, NC 27295 Dear Michael, On behalf of the Community Disaster Relief Center and all recipients of their services, I want to say Thank You! Your donation of $500.00 on 8/21/2012 has been a wonderful gift to our organization and will provide many people…

    • 1161 Words
    • 5 Pages
    Satisfactory Essays
  • Good Essays

    Abbey Bosley February 13,2015 Long Civil Rights Movements Dr.Ringel A Murder In Virginia When reading A Murder in Virginia many questions arise about why this book is important and even why the story about Lucy Pollard death mattered in 1895 let alone why it matters to us now in 2015. Suzanne Lebsock doesn't come right out and tell you the answers to these questions, rather she leaves subtle hints throughout the book and tells you why she…

    • 1096 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Angus Cartright

    • 644 Words
    • 3 Pages

    Dear John, After our last meeting I have carefully analyzed the four different real estate projects that you would be interested in investing. From what I understood your investment profile is: - You have a $9 million budget to invest in real estates and other investments so I took the initiative to assume that you would invest from $5-$6 million in those projects (= 60%) - You are now retired and therefore are looking for a passive, with minimal-risk investment - The willing benefits of your…

    • 644 Words
    • 3 Pages
    Good Essays