Using your existing excel spreadsheet, find the tabs labeled “Sources & Uses”, “Cash Flow,” “Sale,” and “Amortization.”

Assignment #5

After reviewing your total development cost, you and your partners are concerned about where you are going to find enough money to do the deal. Luckily, one of your friends just bought a house and introduces you to their mortgage lender at a local bank. The lender also happens to underwrite commercial loans and is excited to hear about your new company and the proposed project. Before any sit-down meeting, he provides you with the terms for their commercial lending program. He tells you to complete your financial analysis using the loan terms provided and set up a meeting at a later date to discuss the project further.

At this point, you and your partners have researched all of the information and costs needed to analyze the deal, but you still need to complete your cash flow analysis. The cash flow is a critical step in determining whether or not your project is profitable and if you need to make adjustments to the scope of work, construction budget, rent roll, etc. Ideally, your project will cash flow positively and you can confidently move forward with the project. However, more often than not, the project produces a negative cash flow or does not meet your minimum return requirements. It can be discouraging to be put in this position, but it does not necessarily mean the project is a bust. The best developers thrive in these situations because they come up with creative solutions that very few people have the skills to figure out.

Assignment:

1. Using your existing excel spreadsheet, find the tabs labeled “Sources & Uses”, “Cash Flow,” “Sale,” and “Amortization.”
2. Locate the “Cash Flow” tab and complete the analysis. Please keep in mind that your project may have a negative cash flow. If so, the next assignment will attempt to provide creative solutions to mitigate this.
3. Using the loan terms and amortization tabs provided by your “lender”, complete the table on the “Amortization” tab.
4. Finish the calculations on the “Sale” tab.
5. Review the “Sources & Uses” tab and determine the equity to debt ratio.
6. Save all tabs of your spreadsheet and submit to instructors as a PDF. 10 Points