Ventura Aviation Start 1 2 3
Key Assumptions
Construction cost ($) 1,150,000
Loan ($) 550,000
Loan interest rate 7.8%
Loan term (yrs.) 8
Hangar space (sq.ft.) 22,000
Rent ($/sq.ft. per month) 1.10
Rent inflator 2.20%
Operating Costs ($/yr.) 105,000
Cost inflator 2.10%
Tax rate 21.0%
Discount rate 7.5%
Depreciation/year ($) 45,000
Cash Flows
Rent Income 290,400 296,789 303,318
minus: Operating Costs 105,000 107,205 109,456
minus: Interest 42,900 38,838 34,458
minus: Depreciation 45,000 45,000 45,000
= Taxable Income 97,500 105,746 114,404
minus: Taxes 20,475 22,207 24,025
= Net Income 77,025 83,540 90,379
minus: Principal 52,083 56,145 60,525
= Net Operating Cash Flow 24,942 27,394 29,854
minus: Cash Outlay at Start (1,150,000)
plus: Depreciation 45,000 45,000 45,000
= Total Cash Flows (1,150,000) 69,942 72,394 74,854
NPV 200,304
IRR 10%
Note: Tax shields are the tax gains from expensing interest and depreciation. The formula is interest or depreciati
, 4 5 6 7 8 TV
309,991 316,811 323,781 330,904 338,184
111,755 114,102 116,498 118,944 121,442
29,737 24,648 19,162 13,248 6,873
45,000 45,000 45,000 45,000 45,000
123,499 133,061 143,121 153,712 164,869
25,935 27,943 30,055 32,279 34,623
97,564 105,118 113,066 121,432 130,247
65,246 70,335 75,821 81,735 88,110
32,319 34,783 37,245 39,697 42,136
45,000 45,000 45,000 45,000 45,000
77,319 79,783 82,245 84,697 87,136 1,717,215
mula is interest or depreciation expense times the tax rate
Key Assumptions
Construction cost ($) 1,150,000
Loan ($) 550,000
Loan interest rate 7.8%
Loan term (yrs.) 8
Hangar space (sq.ft.) 22,000
Rent ($/sq.ft. per month) 1.10
Rent inflator 2.20%
Operating Costs ($/yr.) 105,000
Cost inflator 2.10%
Tax rate 21.0%
Discount rate 7.5%
Depreciation/year ($) 45,000
Cash Flows
Rent Income 290,400 296,789 303,318
minus: Operating Costs 105,000 107,205 109,456
minus: Interest 42,900 38,838 34,458
minus: Depreciation 45,000 45,000 45,000
= Taxable Income 97,500 105,746 114,404
minus: Taxes 20,475 22,207 24,025
= Net Income 77,025 83,540 90,379
minus: Principal 52,083 56,145 60,525
= Net Operating Cash Flow 24,942 27,394 29,854
minus: Cash Outlay at Start (1,150,000)
plus: Depreciation 45,000 45,000 45,000
= Total Cash Flows (1,150,000) 69,942 72,394 74,854
NPV 200,304
IRR 10%
Note: Tax shields are the tax gains from expensing interest and depreciation. The formula is interest or depreciati
, 4 5 6 7 8 TV
309,991 316,811 323,781 330,904 338,184
111,755 114,102 116,498 118,944 121,442
29,737 24,648 19,162 13,248 6,873
45,000 45,000 45,000 45,000 45,000
123,499 133,061 143,121 153,712 164,869
25,935 27,943 30,055 32,279 34,623
97,564 105,118 113,066 121,432 130,247
65,246 70,335 75,821 81,735 88,110
32,319 34,783 37,245 39,697 42,136
45,000 45,000 45,000 45,000 45,000
77,319 79,783 82,245 84,697 87,136 1,717,215
mula is interest or depreciation expense times the tax rate
