Financial Analysis

Initial Cost Price £28,000.00
Monthly rental returns £500.00

Term 1
Payable to investor if exiting at end of year 6 £8,000.00

Term Year 1 2 3 4 5 6
Cost price (reducing balance) (See Note 1) £28,000.00 £25,150.00 £22,300.00 £19,450.00 £16,600.00 £13,750.00
Yearly rental returns (£500.00* 12 months) £6,000.00 £6,000.00 £6,000.00 £6,000.00 £6,000.00 £6,000.00
Yearly capital returns (See Note 1) £2,850.00 £2,850.00 £2,850.00 £2,850.00 £2,850.00 £2,850.00
Yearly profit (See Note 2) £3,150.00 £3,150.00 £3,150.00 £3,150.00 £3,150.00 £3,150.00
Returns per year (See Note 3) 11% 13% 14% 16% 19% 23%
Average return over term 1 (6 years) 16%

Term 2
Payable by investor for refurbishment of unit: cost at beginning of year 7 £6,000.00

Term Year 7 8 9 10 11 12
Cost price (reducing balance) (See Note 1) £16,900.00 £14,050.00 £11,200.00 £8,350.00 £5,500.00 £2,650.00
Yearly rental returns (£500.00* 12 months) £6,000.00 £6,000.00 £6,000.00 £6,000.00 £6,000.00 £6,000.00
Yearly capital returns (See Note 1) £2,850.00 £2,850.00 £2,850.00 £2,850.00 £2,850.00 £2,650.00
Yearly profit (See Note 2) £3,150.00 £3,150.00 £3,150.00 £3,150.00 £3,150.00 £3,150.00
Returns per year (See Note 3) 19% 22% 28% 38% 57% 126%
Average return over term 2 (further 6 years) 32%
Notes for single unit financial analysis £28,000.00 12-year plan

Term 1
1. Capital sum re-paid annually on cost price & additional £6,000 refurbishment cost i.e £28,000 + £6,000 / 12 years = rounded to £2,850.00 paid annually additional £8,000.00 at the end of 6th year if investor decides to exit
2. Yearly rental returns less yearly capital returns calculated for profit for the year
3. Profit for the Year / Cost Price to arrive at Return Per Year. i.e £3,150.00 / £28,000.00 * 100 = 11% Additional £8,000.00 at the end of 5th year if investor decides to exit Return increases each year as the capital sum is being re-paid annually: returns each year / First 6 Years to arrive at Average return over 6 year period

Term 2
If investor decides to continue into Term 2 they will pay for the additional refurb cost of £6,000
3. Profit for the year / Cost Price to arrive at return per year. i.e £3,150 / £16,900 * 100 = 19%

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