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SUPPORTABLE PURCHASE PRICE <br />The following chart illustrates the method required to calculate a supportable purchase price. Financing <br />is based on a 20 year amortization period with five (5) percent interest. <br />NET OPERATING INCOME <br />YEAR N.O.I. <br />_ <br />2006 $22,500 <br />2007 $28,582 <br />2008 $35,010 <br />2009 $41,797 <br />2010 $48,960 <br />FINANCING ASSUMPTIONS <br />Debt Coverage Ratio 1 3 <br />Amortization Period 20.00 <br />Interest Rate 5.00% <br />Finance Closing Cost $47,000 <br />Short Term Investment Rate 5.00% <br />Operating Reserve $50,000 <br />Annual Loan Amortization Rate 0.0802425 <br />SUPPORTABLE LOAN AMOUNT <br />Stabilized N.O.I. - 2010 48,960 <br />Coverage Ratio _ 1 3 <br />Income Available for Debt Service 37,662 <br />Annual Loan Amortization Rate _ _ _ _0.0802425 <br />$469,347 <br />Supportable Loan Amount Rounded $470,000 <br />SUPPORTABLE PURCHASE PRICE <br />Less <br />Finance Closing Cost (47,000) <br />Reserve for Operating Shortfalls (50,000) <br />Add: <br />Reserve Interest Income (Year 1) 2,500 <br />Net Deductions _~ _ (94,500) <br />375,500 <br />Supportable Purchase Price Rounded $375.000 <br />Based on the stabilized net operating income projection, the project has a supportable loan amount of <br />$470,000 (rounded). After deductions for closing costs and the establishment of an operating reserve, <br />the supportable purchase price is $375,000. <br />a <br />