1. Real Estate Investment Returns. Justin Nicholas, an electrician from Great Bend, Kansas, is interested in the numbers of real estate investments. He has reviewed the fi gures in Table 16.2 and is impressed with the potential 36.9 percent return after taxes. Justin is in the 25 percent marginal tax bracket. Answer the following questions to help guide his investment decisions:

(a) Substitute Justin’s 25 percent marginal tax bracket

(his state has no state income tax) in Table 16.2, and calculate the taxable income and return after taxes.