Essay on Angus Catwright Case

1708 Words Apr 24th, 2011 7 Pages
Angus Cartwright III Case

Exhibit 1 gives us an overview of each of the properties, such as the gross purchase price, the depreciable base, estimated sales prices, the amount of the first mortgage and so forth. These assumptions are significant to the calculations used throughout the entire case. In Exhibit 2 we find the first-year project setups. This is important information because we can see how much each real estate property will cost in the first year. This information is also useful in setting up the projected cash flow analysis for each of the four properties. Alison Green had the greatest before tax cash flow with $434,306.53, Ivy Terrace came in second with before tax cash flows of 336,130.99, 900 Stony Walk came in third
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These also give us a detailed view of the expected schedule of cash flows over the ten years, which basically tell us what the yearly income will be. This can be helpful when analyzing the yearly distribution of cash flows. Exhibit 6 tells us the financial analysis of each of the real estate properties. The Fowler Building has the greatest increase in capital value at 41.49%, while Ivy Terrace has the least increase in capital value with 25.00%. In year 10, if the clients decide to sell their property the Fowler Building will have had the greatest increase in value. Its sale price in September 2003 is estimated at $9,400,000 and in the 10th year in 2013 the estimated sale price would be $13,300,000. Exhibit 7 tells us the Investment Rankings of each property. Overall, Alison green has the best rankings compared to the other real estates. Basically both exhibits 6 and 7 gives us a few measures of the rating the properties. Exhibit 8 tells us the breakdown of the internal rate of return, and the results for the breakdown of internal rate of return are summarized in exhibit 9. 900 Stony Walk has the greatest amount of tax shelter at -26.65%, and The Alison Green has the least tax shelter at -18.35%. The tax shelter implies for the properties that have a higher tax shelter attribute more of their income to taxes. The Fowler Building has the greatest Future benefits at 77.25% and Alison Green has the least future benefits at 44.37%. Exhibit 10
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