Location: Union Vale, NY
The attached spreadsheet model is for the Sky Acers Airport located in Union Vale, NY, and currently listed for sale at $2,750,000. This model includes a pro forma income statement and balance sheet based on market assumptions made from the area, as well as an analysis of the costs of capital and internal rate of return forecasted for the airport. Also included is a high and low market cash flows projection with an optional capital expansion in the case of a high market estimated to be constructed at the end of the fifth year. The model allows variables to be changed for all major inputs of the computations and includes citations for assumed values.
The model input values chosen have been carefully averaged and calculated to be as realistic as possible. In the model with the input values chosen, the airport would have a weighted average cost of capital and internal rate of return of 8.39%. This was accomplished using a 73.7% debt proportion and a purchase price of the assets at $2,400,000. Assuming a high market and that the expansion would take place at the end of the fifth year, the ratios at the end of the tenth year would be 64.5% debt with 35.5% equity.
The variable pricing for such things as tie downs, parking, landing, heated parking (for winter), etc. were calculated using similar sized airports across the country adjusted for cost of living prices in the Union Vale area. Gas purchase and charging prices were forecasted using the past five years as an example of what variations one might anticipate for future prices. Of course, these price inputs (gas especially) are made to be adjusted according to unforeseen changes in the market.
From these calculations and hours of studying similar markets, our model forecasts a positive flow of cash in future years. With such results, we can confidently suggest that buying the airport would not only be profitable but with the extension project in the sixth year would bring about a greater return. Therefore, we conclude that one should take full advantage of this investment opportunity.