Calculation Method 2 for Years Vacant (Forecasted Amount for Years 7 through 10)

The system uses this setup information for this calculation:

• Area of Unit: 10,000.

• Market Rate New (from assumption header): 10.00.

• Growth Pattern (from assumption header): FIXED.

• Term of Assumption: 4 years.

After the term of the real estate lease expires, the system uses the area of the unit and the new market rate from the assumption header, which is an amount per square foot, to determine the base amount to which to apply the growth pattern.

The equation is: (Area of Unit) × (Market Rate) = (Base Amount)

For example:10,000 × 10.00 = 100,000

Next, the system compounds (accumulates) the amounts from the growth pattern entered in the assumption header for the first seven years before adding the result to the base amount. The system uses the resulting base amount instead of the recurring billing amounts that the system uses when the unit is leased.

This table shows how the system compounds the amounts that it uses for the calculation:

Year	Growth Pattern FIXED Compounded	Calculation
7	1,000 + 2,000 + 3,000 + 4,000 + 5,000 + 6,000 + 7,000= 28,000	100,000 + 28,000 = 128,000
8	1,000 + 2,000 + 3,000 + 4,000 + 5,000 + 6,000 + 7,000+ 8,000 = 36,000	100,000 + 36,000 = 136,000
9	1,000 + 2,000 + 3,000 + 4,000 + 5,000 + 6,000 + 7,000+ 8,000 + 9,000 = 45,000	100,000 + 45,000 = 145,000
10	1,000 + 2,000 + 3,000 + 4,000 + 5,000 + 6,000 + 7,000+ 8,000 + 9,000 + 10,000 = 55,000	100,000 + 55,000 = 155,000

Total Amount Used Instead of Recurring Billing Amounts:128,000 + 136,000 + 145,000 + 155,000 = 564,000

After the system calculates the compounded base amount for each year, it sums the amounts and multiplies the result by the compounded rate to derive the forecasted amount for each year. The system starts compounding based on the first year of the growth pattern (not the seventh). In other words, the growth rates start over when an assumption becomes effective.

This table shows how the system derives the forecasted amount for years 7 through 10:

Year	Compounded Rate for Calculation	Forecasted Amount
7	(.03 × .01) + .03 = .0303	564,000 × .0303 = 17,089.20
8	(.0303 × .02) + .0303 = .030906	564,000 × .030906 = 17,430.98
9	(.030906 × .03) + .030906 = .03183318	564,000 × .03183318 = 17,953.91
10	(.03183318) × .04 + .03183318 = 03310651	564,000 × .03310651 = 18,672.07

The total forecasting amounts for years 7 through 10:17,089.20 + 17,430.98 + 17,953.91 + 18,672.07 = 71,146.16

The system updates the total forecasted amount to the first period of the first year that the assumption is effective in the F15L109 table. In this example, the system updates the total forecasted amount to period 01 of 2008.