Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

annual loan payment: 53,214.34 annual depreciation expense: 19,615.38 after tax cash flow (ATCF) for year 1: 31,776.04 What is the after tax cash flow from

image text in transcribed

annual loan payment: 53,214.34

annual depreciation expense: 19,615.38

after tax cash flow (ATCF) for year 1: 31,776.04

What is the after tax cash flow from the sale at the end of year 3?

Given the following information, please calculate after tax cash flow for year 1. Assuming a sales price of $1,100,000, please calculate the after tax cash flow from the sale (don't forget the depreciation recapture.) Finally, calculate the after tax IRR for the investment. Canvas will ask you other questions in addition to these. So, calculate all of this first, then proceed to the actual quiz questions. They are given one at a time, each as a separate quiz. Do not move on to the next question until you have the current one correct. Since some of the answers build on the previous question, there's no point in moving forward until you have the current question correct. Notice that Quizzes 1-4 are one point, but Quiz 5 is 6 points with just one answer. There is no time limit and there is no limit on the number of attempts. Purchase Price: $900,000 Loan: $750,000, 5%, 25 years (annual payments) Year 1 NOI: $100,000 Year 2 ATCF: $33,000 Year 3 ATCF: $34,000 Use an 85/15 ratio for depreciation. 39 year, straight line. 35% tax rate on income, 15% on long term capital gains, 25% depreciation recapture

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Handbook Of Portfolio Mathematics

Authors: Vince

1st Edition

0471757683, 978-0471757689

More Books

Students also viewed these Finance questions