2. In the coming year, the Sandbergs expect a potential rental property investment costing $120,000 to have gross potential rental income of $20,237, vacancy and collection losses equaling 4% of gross income, and operating expenses of $9,599. The mortgage on the property is expected to require annual payments of $8,513. The interest portion of the mortgage payments and the depreciation are given below for each of the next 3 years. The Sandbergs are in the 25% marginal tax bracket.

Year	Interest	Depreciation
1	$8,313	$4,209
2	8,213	4,209
3	8,113	4,209

The net operating income is expected to increase by 6% each year beyond the first year.

a.Calculate the net operating income (NOI) for each of the next 3 years.

b.Calculate the after-tax cash flow (ATCF) for each of the next 3 years.