Development Budget and A Cash Flow Projections - Accounting and Finance Assignment Help

Assignment Task

Dr. Nicholson
Prepare a development budget (both construction and permanent) and a cash flow projections for 10 years using following assumptions:
1. Total Number of Residential Units: 20- 1 Bedroom Apartments and 10- 2 Bedroom Apartments

2. Total Number of Commercial Units: 2 Units each with 2,500 sq. ft.
3. Gross Building Area: 36,000 sq. ft.
4. Construction Cost (both residential and commercial portion): $150 per sq. ft.
5. Land Acquisition Cost: $1.5 million
6. Hard Cost Contingency: 5% of Construction Cost
7. Soft Cost: 20% of Total Construction Cost (Construction Cost plus Contingency)
8. Soft Cost Contingency: 5% of Soft Cost
9. Developer’s Fee: 10% of Total Construction Cost (Construction Cost plus Contingency)
10. Operational Reserve: 3% of Total Construction Cost (Construction Cost plus Contingency)
11. Residential Vacancy: 3%
12. Commercial Vacancy: 5%
13. Annual Residential Income Increment: 2%
14. Annual Commercial Income Increment: 2%
15. Residential Income at Year 1: $1,500 per month (1 Bedroom); $1,800 per month (2 Bedroom)
16. Commercial Income at Year 1: $40 per sq. ft. per year
17. Annual Expenses: 8% of Gross Income
18. Construction Loan Interest Rate: 6%
19. Construction Loan Financing Fee: 1% of Construction Loan
20. Construction Duration: 12 months
21. Permanent Loan Interest Rate: 4.5% for 10 years
22. Permanent Loan Financing Fee: 1% of Permanent Loan
23. Required DSCR: 1.2 at year 10
24. Developer’s Equity: $4,000,000
25. Deferred Developer Fee During Construction: $500,000
26. Construction Loan: Upto 60% of Total Development Cost

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