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 (dont forget the depreciation recapture.) Finally, calculate the after tax IRR for the investment.

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 project ceased

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.

1. What is the annual loan payment?

2. What is the annual depreciation expense?

3. What is the after tax cash flow (ATCF) for year 1?

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

5. What is the IRR of the investment?