INVESTMENT ANALYSIS
Projected cash flow and profitability for a single family home

Below is the cash flow and profitability analysis for a single family home in The Southeast Valley area.  Assumptions include: purchase price - $140,000; down payment - $38,000; closing costs - $2,000; interest rate - 7.25%; monthly rent - $1,150;  vacancy factor - 5%; management fee - 8%; taxes and insurance - $1,650.  The following data is for information purposes only and the accuracy of the figures hereinafter set forth is not guaranteed.

Depreciation Schedule for Asset
Amortization Schedule for Loan
Projected Annual Cash Flows
Profitability Analysis
Depreciation Schedule for Asset
YEAR BEGINNING BASIS DEPRECIATION CLAIMED UN-DEPRECIATED BALANCE STRAIGHT LINE BASIS EXCESS DEPRECIATION
1 112000 4073 107927 107927 0
2 107927 4073 103855 103855 0
3 103855 4073 99782 99782 0
4 99782 4073 95709 95709 0
5 95709 4073 91636 91636 0
6 91636 4073 87564 87564 0
7 87564 4073 83491 83491 0
8 83491 4073 79418 79418 0
9 79418 4073 75345 75345 0
10 75345 4073 71273 71273 0

Amortization Schedule for Loan
YEAR PAYMENT INTEREST EXPENSE PAID ON PRINCIPAL REMAINING PRINCIPAL
1 8350 7360 987 102000
2 8350 7289 1061 101013
3 8350 7209 1141 99952
4 8350 7124 1226 98811
5 8350 7032 1318 97585
6 8350 6933 1417 96266
7 8350 9827 1523 94849
8 8350 6712 16637 91689
9 8350 6590 1760 89929
10 8350 6458 1892 88037

Projected Cash Flows Year 1 - 5
YEAR 1 2 3 4 5
Gross Rent 13800 14076 14358 14645 14938
- Vacancy 690 704 718 732 747
Effective Gross Income 13110 13372 13640 13912 14191
- Insurance & Taxes 1620 1652 1685 1719 1754
- Operating Costs 1500 1530 1561 1592 1624
Net Income 9990 10190 10394 10601 10813
-Depreciation 4073 4073 4073 4073 4073
- Interest 7363 7289 7209 7124 7032
Taxable Income -1445 -1172 -888 -595 -291
+ Depreciation 4073 4073 4073 4073 4073
- Principal Payment 987 1061 1141 1226 1318
Cash Flow 1640 1840 2044 2252 2464
- Income Taxes 0 0 0 0 0
Spendable Cash 1640 1840 2044 2252 2464
+ Plus Tax Savings on Other Income 477 387 293 196 96
After Tax Income 2117 2227 2337 2448 2560
Debt Coverage Ratio Note 1 1.1964 1.2204 1.2448 1.2697 1.2951

Projected Cash Flows Year 6 -10
YEAR 6 7 8 9 10
Gross Rent 15236 15541 15852 16169 16492
- Vacancy 762 777 793 808 825
Effective Gross Income 14474 14764 15059 15360 15668
- Insurance & Taxes 1789 1824 1861 1898 1936
- Operating Costs 1656 1689 1723 1757 1793
Net Income 11030 11250 11475 11705 11939
-Depreciation 4073 4073 4073 4073 4073
- Interest 6933 6827 6712 6590 6458
Taxable Income 24 351 690 1042 1408
+ Depreciation 4073 4073 4073 4073 4073
- Principal Payment 1417 1523 1637 1760 1892
Cash Flow 2680 2901 3126 3355 3589
- Income Taxes 8 116 228 344 465
Spendable Cash 2672 2785 2898 3011 3124
+ Plus Tax Savings on Other Income 0 0 0 0 0
After Tax Income 2672 2785 2898 3011 3124
Debt Coverage Ratio 1.3210 1.3474 1.3743 1.4018 1.4298

Profitability Analysis Year 1 - 5
YEAR 1 2 3 4 5
Gross Resale Price 147000 154350 162068 170171 178679
- Sales Costs 10290 10731 11194 11680 12191
Net Resale Price 136710 143619 150873 158491 166489
- Ordinary Tax 0 0 0 0 0
- Loan Principal 101013 99952 98811 97585 96266
Net Resale Proceeds 35697 43667 52063 60906 70222
Internal Rate of Return Note 2
On Investment -.49% 12.72% 16.35% 17.58% 17.93%
On Total Capital 3.39% 7.04% 8.22% 8.77% 9.08%
Financial Management Rate of Return Note 3
On Investment 1.49% 12.48% 15.75% 16.68% 16.80%
On Total Capital 3.39% 6.93% 7.95% 8.35% 8.51%

Profitability Analysis Year 6 -10
YEAR 6 7 8 9 10
Gross Resale Price 187613 196994 206844 217186 228045
- Sales Costs 12727 13290 13881 14501 15153
Net Resale Price 174887 183704 192963 202685 212893
- Ordinary Tax 0 0 0 0 0
- Loan Principal 94849 93326 91689 89929 88037
Net Resale Proceeds 80037 90378 101274 112756 124856
Internal Rate of Return
On Investment 17.90% 1`7.71% 17.44% 17.14% 16.82%
On Total Capital 9.25% 9.36% 9.42% 9.45% 9.47%
Financial Management Rate of Return
On Investment 16.59% 16.25% 15.86% 15.46% 15.06%
On Total Capital 8.96% 9.24% 9.41% 9.51% 9.58%
Note:  These calculations do not include any consideration of the Federal Minimum Tax
Note 1:  Debt Coverage Ratio  is the ratio of annual net income to annual debt service
Note 2:  Internal Rate of Return is the rate of discount at which the present worth of future cash flows is exactly equal to the initial capital investment
Note 3:  Financial Management Rate of Return is an alternative measuring technique to the Internal Rate of Return when selecting alternative investments