Waldo County mini case

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Waldo-Case-Solution.xls
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WALDO COUNTY
Minicase Solution
Inputs: Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Cash Flows: 4 5
Inflation 2% Investment (Real)
Land -30 30 0
Discount rate Construction -20 -30 -10
(real) 0.0686 Operations:(Real)
(nominal) 0.090 Rentals 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 0
Share of rentals sales 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 0
Tax rate 0.35 Operating & maint costs -2 -4 -4 -10 -10 -10 -10 -10 -10 -10 -10 -10 -10 -10 -10 -10 -10 -10 0
Real Estate Taxes -2 -2 -3 -4 -4 -4 -4 -4 -4 -4 -4 -4 -4 -4 -4 -4 -4 -4 0
Forecast errors: Pre tax Cash Profits -4 -6 -7 22 22 22 22 22 22 22 22 22 22 22 22 22 22 22 0
Tax -1.4 -2.1 -2.45 7.7 7.7 7.7 7.7 7.7 7.7 7.7 7.7 7.7 7.7 7.7 7.7 7.7 7.7 7.7 0
Rentals 0 Post tax cash profits -2.6 -3.9 -4.55 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 0
Share of sales 0
Constructions 0 Cash flow (real) -52.6 -33.9 -14.55 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 30 0
PV $79.67
No Delay? 1
Delay? 0 Dep Tax Shields(nominal)
Dep 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 0
Tax shield 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 0
PV $9.50
NPV $36.56