Set up the projected capital accounts for the lender and the developer with their projected cash flows each year, and compute
the projected IRR for: (a) The underlying project as a whole; (b) The lender; and (c) The developer.
Please use the following template to help you organize and present your answer.
(You may use the back of the page for computations.)
| Period | 0 | 1 | 2 | 3 | 4 | IRR |
| Project net cash flows | ($10,000) | $1,000 | $1,000 | $1,000 | $11,000 | |
| Lender: | ||||||
| Credit Line Ceiling | ||||||
| Available | ||||||
| Beginning Balance | ||||||
| Draw | ||||||
| Interest Earned | ||||||
| Repayments to Lender | ||||||
| Ending Loan Balance | ||||||
| Lender CF | ||||||
| Project CFs after loan CFs | ||||||
| Developer: | ||||||
| Beginning Balance | ||||||
| Draw | ||||||
| Repayments | ||||||
| Ending Balance | ||||||
| Developer CF | ||||||
| Project CFs after Loan / Dvlpr CFs |
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Real Estate Finance & Investment Final Exam 2006
Author:
Prof.David GeltnerProfessor
MIT Massachusetts Institute of Technology
USA
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