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A property could be sold today for $212 million. It has a loan balance of $112 million and, if sold, the investor would incur a
A property could be sold today for $212 million. It has a loan balance of $112 million and, if sold, the investor would incur a capital gains tax of $257,000. The investor has determined that if it were sold today. she would earn an RR of 15 percent on equity for the past five years. If not sold, the property is expected to produce after-tax cash flow of $55,190 over the next year. At the end of the year. the property value is expected to increase to $2.22 millon, the loan balance will decrease to $990.000, and the amount of capital gains tax due is expected to increase to $297.000. Required: a. What is the marginal rate of return for keeping the property one additional year? Note: Enter your answer as a percent rounded to 2 decimal places
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