Consider the following information for the first year of a proposed property acquisition: effective gross income (EGI) is estimated to be $1.5 million;

Operating expenses are $450,000

$25,000 will be put into a capital improvement reserve account

The investor has a 35% marginal tax rate

The property is going to be acquired with a 65% LTV mortgage, interest-only with a 10-year term and 6% interest rate. The acquisition cost implies an 8.4% going-in cap rate, based on first-year NOI. It is anticipated that 25% of the acquisition cost will be allocated to land for tax purposes. Depreciation is straight-line over 39 years.

Determine the first-year EATCF (Equity after-tax cash flow)