Problem
Provide your responses to the green boxes located in the "Assumptions" tab of the spreadsheet that is attached to this message, which are specific to the property you have chosen during Phase I. These responses will automatically populate Tables 1, 2, and 3. Property: What assumptions are necessary when conducting a CAPEX analysis?. Provide a detailed explanation of each of your contributions and cite all of the sources that you have used.
The net present value, modified internal rate of return, economic value added, and discounted payback period calculations will all benefit from the assumptions that you provide.
• Operational cash flow from short-term rentals, such as the average daily rate (range), management fee (range), and vacancy rate (range), as well as financing through buying and selling. This includes the required rate of return (also known as the discount rate), growth rate, financing rate (also known as mortgage interest rate), closing cost, and reinvestment rate.
• Taxes: The depreciation method used (straight or double declining) (worth 10 points and approximately one-third of a page). The student Excel file includes a built-in function for testing results. Federal and state tax rates for entities.
• Table 1: Operational Net Cash Flow,
Table 2: Terminal Cash Flow, and
Table 3: Year 10 Operational Net Cash Flow are the summaries.
1. What is the average daily rate for short-term rental properties in the Fort Myers area?
2. How does the management fee for short-term rentals affect the operational cash flow?
3. What is the expected vacancy rate for short-term rental properties in Fort Myers?
4. What are the financing rates for mortgages in the Fort Myers area?
5. What is the required rate of return or discount rate for this property investment?
6. What is the growth rate of the property, and how does it impact the investment?
7. What are the costs associated with closing on and selling the property?
8. What is the reinvestment rate for this investment?
9. What is the depreciation method used to calculate taxes for this property?
10. What are the federal and state tax rates for the entity that owns the property?