- Each group will write a recommendationletter regarding the property that they areconsidering using graphs, charts, tables,and text.
- This should be considered a professionaldocument, not academic.
- All group members are responsible forALL the content in the document.
- Special attention should be made toensure that the letter flows and is notseveral individual topics combined into alonger, but disjointed document.
- The letter will contain:
- the DCF calculations
- a recommendation of how much topurchase the property for
- a sensitivity analysis for the significantvariables
- an explanation of the selection ofvariables
- an explanation of the assumptions used
- the analysis performed
- a description of the pros and cons thatsupport the recommendation
- The letter must be written usingprofessional language and formatting.
- The letter must be in PDF format and mustinclude the necessary tables andcalculations.
- The text portion of the letter must not bemore than ten pages. However, charts andtables should be incorporated and maymake the overall length of the letter longer.
- Additionally, one Excel file showing allthe calculations and tables must besubmitted.
- Proper citation must be used.
This is a group project that requires eachgroup to analyze an apartment complex thatis available for sale. Each group will performa 10-year discounted cash flow analysis(DCF) that will need to consider manydiffering factors. Depending on the property,there may be consideration of an assumableloan, section 8 units, rent control, or anynumber of other characteristics. Groups willbe provided with a market overview that theymay use in the analysis of the property.
Students may not contact anyone involved inthe property listing and may not visit theproperty. Students must rely on publiclyavailable data and the data provided by theprofessor. Market research beyond what isprovided by the professor should be minimal.
- The client has an income tax rate of 23%.
- The property tax rate is 1.25%.
- The capital gains tax rate is 15%.
- Financing terms should be market.
- The land makes up 40% of the value.
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