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Start Excel. Download and open the file named *Excel_Project*.

In the *NOI* sheet, calculate the Total Rentable Square Feet (RSF) by Unit Type in range F3:F7 by multiplying the number of units for each type by the square footage of each unit type. Then calculate the Total rentable square footage of the building in cell F8.

In cell I4, enter a formula that calculates the annual insurance expense for Year 1. As the building owner, you obtain insurance at a rate of $400 per residential unit. Commercial units pay their own insurance. So you only pay insurance on the residential units.

In cell I5, enter a formula to calculate the Repairs & Maintenance expense estimate for Year 1. You assume that each *month*, there will be a repair expense of $120 for half of the residential units. Commercial units pay for their own repairs and maintenance.

In cell I6, enter a formula to calculate the annual Utilities expense estimate for Year 1. All tenants will pay their own utilities. But you, the owner, will pay $0.40 per square foot per month for the 1200 square feet of common area space (E13) of the building (lobby, hallways, elevator, gym, etc.).

In cell I9, enter a formula to calculate the annual Janitorial Cleaning expense estimate for Year 1. A cleaning company can clean the 1200 SF common area twice per week at a rate of $150 per day. Enter the annual cleaning expense, assuming 52 weeks in a year.

In cell I10, enter a formula to calculate the annual property Management fee. Management companies charge 5% of rental income. (Use monthly rent estimates in range C3:C7 and the number of units per type in range D3:D7 to determine annual rental income.)

In cell I12, enter a formula to calculate the annual doorman security expense estimate for Year 1. You will employ 2 doormen. Each one spends an 8 hour shift each day, 6 days per week. Assume 52 weeks per year and $12/hour wage for each doorman.

In cell I13, enter a formula to calculate the Brokerage Fee to find tenants for all of the residential units. Realtors charge the equivalent of one month of rent for each unit leased.

In cell I14, enter a formula to calculate the Brokerage Fee to find tenants for all of the commercial units. Each commercial lease is negotiated for a 5-year term of fixed rent. So the brokerage fee for each unit is an upfront charge of 5% of the total rent for the entire 5-year lease period.

In cell I15, enter a formula to calculate the Capital Reserves estimate for Year 1. Capital Reserves are savings put aside in case there is a large unforeseen repair or expense incurred. You estimate a capital reserve of $0.50 cents per RSF of the building.

In cell E19, enter a VLookup function to calculate the **annual** base rent for the first unit based on Unit Type. Use the Year 1 Rental Assumptions table in your formula and make sure to calculate *annual* rent. Copy your formula down the column to cell E42.

You assume that Residential Rent will increase by 2% each year (see cell E11). For each residential unit, calculate annual rent estimates for Years 2 to 10 by applying the Residential Rent Increase to the previous year’s rent.

Base rents for the commercial unit leases are fixed for 5 years. And you assume a Year 6 rent increase (see cell E12) that will be fixed for Years 6 through 10 as well. For each commercial unit, enter the annual rent for Years 2 to 10, taking into account that in the 6th Year, there will be a new increased rent that is fixed for the remaining 5 years.

Calculate Total Base Rent for each year in row 43. Apply Bold font to this row and format the values as Currency format with no decimals.

You negotiate a percentage rent component of the lease with the *Large Commercial* tenant in Unit G1. The Percentage Rent clause says that the tenant will pay you 2% of their * gross sales*, not to exceed $12,000 in percentage rent. The Large Commercial tenant has given you their sales projections for the next 10 years (row 79). Enter an IF function in cells E45:N45 that calculates the percentage rent based on the tenant’s sales projection for that Year.

Calculate Potential Gross Rent for each year in row 46 by adding Percentage Rent to Total Base Rent. Apply Bold font to this row and format the values as Currency format with no decimals.

You can expect a certain amount of vacancy and uncollected rent each year, which is accounted for in the Vacancy and Collection Loss estimate (cell E14). Calculate Vacancy and Collection Loss estimate by multiplying the loss factor to the Potential Gross Rent for each year in row 48.

Subtract Vacancy & Collection Loss from Potential Gross Rent to determine Effective Gross Rent for each year in row 49. Apply Bold font to this row and format the values as Currency format with no decimals.

In cell E54, enter an HLookup formula based on the Year to determine the real estate tax rate using the table in the Taxcast sheet. (Do not enter the hardcoded tax rate.)

You multiply the real estate tax rate per square foot (found by the HLookup) to the residential square footage. The commercial units will pay their own share of taxes. Copy your formula to Years 2 to 10.

Hint: See Tax Expense formula in cells I3 and J3.

Set cell E55 equal to the Year Insurance expense in the Operating Expense Assumptions table at the top of the sheet. Copy the formula down to cell E60. For each of the expenses in rows 55 to 60, calculate Year 2 to Year 10 expenses using their respective annual percentage increases displayed in column B.

Management Fees are calculated as a percentage of Total Base Rent. In row 61, enter a formula to calculate the Management Fee for each year using the annual percentage fee displayed in column B.

You negotiate a maintenance contract with the elevator manufacturer for a fixed cost of $900 per year for 10 years. Set cell E62 equal to the appropriate cell in the Operating Expense Assumptions table. Enter a formula in cells F62:N62 to display the annual Elevator Maintenance cost for each year.

Set cell E63 equal to the appropriate cell in the 2020 Operating Expense Assumptions table. Enter a formula in cells F63:N63 to display the annual Security expense using the annual percentage increase displayed in column B.

Set cell E64 equal to the appropriate cell in the Operating Expense Assumptions table.

Assume you’ll pay a brokerage fee to either rent out or renew all of the residential units every 2 years. The brokerage fee for each unit will be 1-month of that year’s rental rate.

Enter a formula every two years starting in Year 3 to calculate the Brokerage Fee for Residential units.

Set cell E65 equal to the appropriate cell in the Operating Expense Assumptions table.

Assume you’ll pay a brokerage fee to re-rent or renew each commercial unit every 5 years. The brokerage fee for each unit will be a percentage of the total rent over the entire 5 year lease period.

Enter a formula to calculate the Brokerage Fee for Commercial units. Hint: Commercial unit brokerage fees will only be paid out in Year 1 and Year 6.

Set cell E66 equal to the appropriate cell in the Operating Expense Assumptions table. Enter a formula in cells F66:N66 to display the annual Capital Reserves using the annual percentage increase displayed in column B.

Calculate Total Expenses for each year in row 67. Then calculate Net Operating Income for each year in row 69. Net Operating Income is calculated as Effective Gross Rent less Total Expenses. Apply Bold font and format the values as Currency format with no decimals for both rows.

Select the 2020 Expense Assumptions in array H3:I15 and make a pie chart. Move it to its own sheet named *Expense Chart*.

Apply Chart Style 7 to the pie chart. Change the Chart Title to *Expense Comparison*. Position the Legend on the righthand side.

Using the Data Labels task pane, remove the Values and display the Percentages and Categories. Close the task pane. Position the data labels as Data Callout.

Change the Legend Font to Times New Roman size 8. Change the Data Labels to Times New Roman size 6.

Place the *Expense Chart* sheet between the *NOI* sheet and the *Taxcast* sheet.

For Extra Credit, calculate the Cash Flow After Debt Service. Assume you can purchase this building for $6.1 million. Calculate the Down Payment, Loan Amount, Monthly Debt Payment and Annual Debt Payment based on the information given in the Mortgage Finance table in the NOI sheet.

In row 72, enter the total annual debt service for each year. In row 73, calculate the Cash Flow After Debt Service for each year. Apply Bold font and format the values as Currency format with no decimals for both rows.

Save the workbook under **FirstNameLastName_****ExcelProject**. Close the workbook and then exit Excel. Submit the workbook as directed.

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