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<br />SUPPORTABLE PURCHASE PRICE <br /> <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 /> <br />NET OPERATING INCOME <br /> <br />YEAR <br />2006 <br />2007 <br />2008 <br />2009 <br />2010 <br /> <br />N.O.I. <br />$22,500 <br />$28,582 <br />$35,010 <br />$41,797 <br />$48,960 <br /> <br />FINANCING ASSUMPTIONS <br />Debt.Coverage Ratio <br />Amortization Period <br />Interest Rate <br />Finance Closing Cost <br />Short Term Investment Rate <br />Operating Reserve <br />Annual Loan Amortization Rate <br /> <br />1.3 <br />20.00 <br />5.00% <br />$47~000 <br />5.00% <br />$50,000 <br />0.0802425 <br /> <br />SUPPORTABLE LOAN AMOUNT <br />Stabilized N.O.!. - 2010 <br />Coverage Ratio <br />Income Available for Debt Service <br />Annual Loan Amortization Rate <br /> <br />Supportable Loan Amount <br /> <br />Rounded <br /> <br />48,960 <br />1.3 <br />37,662 <br />0.0802425 <br />$469,347 <br />$470,000 <br /> <br />SUPPORTABLE PURCHASE PRICE <br />Less: <br />Finance Closing Cost <br />Reserve for Operating Shortfalls <br />Add: <br />Reserve Interest Income (Year 1) <br /> <br />(47,000) <br />(50,000) <br /> <br />Supportable Purchase Price <br /> <br />Rounded <br /> <br />2,500 <br />(94,500) <br />375,500 <br />$375,000 <br /> <br />Net Deductions <br /> <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 /> <br />4 <br />