Okay so now we are ready to get together our comprehensive net cash flows for the sponsor, the equity and for the lender and figure out how everything is going to look for each party. One at a time, never mix the lender and the equity, or the sponsor, or the developer, okay. So what we've got here is first, we've got some overall information which we're going to pull out for one of these parties at a time. We know the total cost, that adds up to 3.8 million, and we know how much it is in each period. I've just got, I've hidden some columns in the spreadsheet here so I can show you everything conveniently on one page. Financing Value Added in the Period, we know that's what the lender is going to allow to lend against. And the Incremental Loan Draw is 60% in this case of above. Okay, and the what's the equity payment? The equity payment is every cost in that period except for the amount that the lender has paid in that period, okay. So, in period one for example we have a 193,000 total cost in the period. The lender is going to put in 30,000 for that, and the developer has to put in the rest, 163,000, okay? And we do that for every period here. Okay. Let's keep going. So now we want to get our comprehensive cash flows for the lender and equity. Comprehensive cash flows in each period for one player at a time, either the developer or the lender. Their total net cash flow, in or out for this project in that period, okay. So let's see how this looks to the vendor at time t equal 0, the beginning of the project, they're going to do nothing, okay? And in the first period, they have agreed to pay 30,000. Now how does that work? They're going to pay 30,000 against, I'm going to go way back here, they're going to pay 30,000 against the 50,000 of the cost of the land. They're not going to lend that money until that 50,000 has been spent. So the way that it works is the developer goes out and spends 50,000 of their own money okay, to buy this land and then they prove that they own it and then once the developer has seen that, they give them $30,000, okay. And the lending contracts says of course, if the developer goes bankrupt after that, all of the assets associated with this project go to the lender. So that would be the land so the lender would have gotten a $50,000 piece of property for 30,000 if the developer flamed out right away. Okay, so that's how that's how it works, and Let's see here, okay, and we just go through this month by month by month for the lender. We know the loan draw because we've computed that from the prior payage. Okay, now we need to know for each of this loan draws, how much does it grow to at that 1% a month interest rate by when? By the time the developer has to pay it back, okay. So this 33,470 is equal to what? It's equal to 30,000 times 1 plus 1% raise to the 11 for 11 months, okay? We need to compute that for each loan draw, and we need to add it up, and the end get the total because that's what the developer is going to have to pay back, okay? The loan draw that they got plus the interest on that draw, okay. So you can see for month 11 here, this has grown very little because it just grows one month at 1% to get us to month 12, okay. And we can compute our back end fee, once we know the amount to be paid back, that's a percentage of the amount to be paid back. And so the total to be paid back is going to be the loan draws plus the interest on each loan draw plus the fee or 2 million and change. And when's that going to be paid back? At the end of month 12. All right, so we just get all this sorted out for the lender. And now for every period we add everything up carefully, okay, which in months 1 to 11 is simply the loan draws, okay. So they're going to be out, the lender is going to pay 30,000 in month one. They're going to pay a 154,000 in month three, etc.etc. And then we get to month 12, okay, and they're not paying out anything, but what are they getting back? They're getting back in that month, they're getting back all of their loan draws plus interest on each one, plus their back end fees, and that adds up to 2 million, so that gives us our 2 million. So this line is very important because this line is what we used to compute IRR's and NPV's and things like that. IRR is for lenders, and PVs for developers. Now we do the same thing with the developer. Good place to start is a project cost paid by equity in each month, which we know. So we have that for each month up to 12, okay? Loan principle and interest. They don't pay anything. The contract with the lender is that they don't pay anything back until the end of month 12. When they pay back here in month 12, the loan principal and interest and that back end fee, okay. So now we can have a nice sub total here for the development and financing costs paid by equity. But we're not done because what else is the developer going to do? The developer is going to sell the project and pay tax on the gain, sale price minus what they put into it, okay. So in the 12th month we have estimated sale price of 4.1 million. I do have that explained how they estimated that in the spreadsheet so you can look at that. But let's just say for now cost $3.8 million for design for development, for design and construction plus more for financing. But they're going to be able to sell this to someone they believe for almost $4.2 million, and they going to have to pay tax on the difference between the 4.2 and the 3.8 at their 25% tax rate, and that comes out to 75,000. Again, you can see how all these numbers are calculated in the spreadsheet if you like. So now I think we've got everything, for the developer. We add everything up in every period and now we have equities comprehensive cash flows. What can we do with that? We can use DCF methods to evaluate this for equity probably NPV, for the lender, we'll want to use for IRR.
