Blueprint Court: fictional teaching case

Read the base case correctly

All amounts below are in US dollars.

The teaching model assumes $2 million in development uses, funded by $1.2 million of debt and $800,000 of equity. Those sources reconcile with cost, but neither represents committed financing.

Annual effective income of $255,840 less $95,840 in operating expenses produces $160,000 of net operating income, or NOI. Under the course convention, reserves sit below NOI. Deducting $6,000 of reserves and $100,000 of annual debt service leaves $54,000 of simplified pre-tax cash flow. Gross rent, NOI and available cash are different quantities.

Change the assumptions

In one separate downside exercise, NOI falls to $144,000 and the assumed capitalization rate rises to 7.5%. Dividing NOI by that rate indicates $1,920,000 of value. If total cost also rises to $2.2 million, estimated value is below cost. This aggregate scenario does not rebuild individual rent and expense drivers.

• Identify which inputs changed and which remained fixed.
• Keep valuation separate from cash received through a completed sale.
• Do not report project IRR without a complete dated cash-flow schedule.

Write the unresolved decision

The case supplies no real market study, title review, approvals or contractor proposal. A reasonable learning recommendation might be to investigate demand and utility feasibility within a defined budget before considering further commitments.

Use this preview to understand relationships, not to judge a live investment. The proposed course develops the supporting analysis separately; enrollment and delivery remain in development.