4. Jena and Michelle decide to form a partnership to invest in Real estate. On June 30th, they Purchase 40-unit residential building with 10,000 square feet of retail space on the ground floor for $1,750,000. They obtained a first mortgage on the property in the amount $1,200,000 with a condition that Jena had to Guarantee the loan. Jena contributed cash of $200,000 and Michelle contributed $350,000.

a. Calculate the ending capital for each partner. (5 points)

5. Using the above facts, assume the residential units rent for $750 per month and the retail space leases for $15.00 per square foot annually. Based on the property appraisers web site you determine the land is 40% of the purchase price.

a. State the depreciation rate used and explain why. (5 points)

b. Calculate the depreciation for year 1 and year 2. (5 Points)