Short Term Rental – Financial Forecasting Model: 5 Year FRC / 3-Statement Model / DCF Project Valuation

Description
Model Description & Objectives
Overview & Main Objective : A fully comprehensive Financial Forecasting Model, suitable for a Short Term Rental Business. The main objective is to develop a 5 year Financial Forecast for the Rental Business, by using a 3-Statement Model (Income Statement, Balance Sheet, Cash Flow). Moreover, to provide a Capital Budgeting Valuation for the Short Term Rental Project by using a Discounted Cash Flow Model.
The model assumes the initial purchase of 5 rental properties, and the project is valuated over a period of 5 years. For the purposes of the Capital Budgeting Valuation exercise, it is assumed that the properties are sold at the end of the 5 year period.
EBITDA Calculation : A 5 year Business Operations Forecast is performed, taking into account all the relevant revenues and costs for each of the 5 Rental Properties, in order to end up with the EBITDA for the Short Term Rental Business.
Financial Forecast : A 5 year Financial Forecast is performed for the 3 main Financial Statements: Income Statement, Balance Sheet & Cash Flow Statement. Moreover, one can see the main Financial Ratios in the relevant worksheet.
Project Valuation : A Capital Budgeting Project Valuation is performed in the relevant worksheet using a Discounted Cash Flow model, in order to decide whether it is financially beneficial to undertake the project. A set of different criteria are examined: NPV, IRR, Profitability Index, Payback Period. The required Return on Equity is calculated through the Capital Asset Pricing Model (CAPM). The WACC of the firm is then calculated taking into account also the cost of Dept.