Hello, I'm working in the Investment Analysis for Real Estate Decisions, 8th edition, on page 228 I need help with #1 and #2 about income tax consequences and before tax cash flow. I put the relevant pages below. This one is part 4 and I have done the previous cases that are part of this case. I have looked and this is not already solved in Chegg.
There are 2 previous cases which I have already done:
This is my spreadsheet from the previous cases:
Here is what is cut off on the right side of the above image:
PAR Case Problem 1. Please refer to the Case Problem for Part Three. Assignment 2 of that case required you to develop a seven-year projection of before-tax cash flows from the St. George Apartments. If you have not yet completed that assignment, please do so now. Using the format illustrated in Figure 10.2 (or an alterna- tive format prescribed by your instructor), incorporate income tax conse- quences and extend the forecast to include after-tax cash flow from operation. In developing your projection, make the following assumptions: a. Eighty percent of the purchase price is attributable to the buildings, and the taxpayer is in the 40 percent marginal income tax bracket. b. Because she is engaged full time as a real estate practitioner, she is not subject to the passive activity rules. c. She will incur no liability for the alternative minimum tax during the pro- jection period. 2. Assignment 4 of the Case Problem for Part Three asks you to estimate before tax cash from the disposal of the St. George after seven years. If you have not yet done so, please complete that assignment now. Using the format illus- trated in Figures 11.1, 11.2, and 11.3 (or the format recommended by your instructor), extend the forecast to include after-tax cash flow from disposal assuming that the gain on disposal will be taxed at 25 percent (if it represents unrecaptured depreciation) or 15 percent (if it is long-term capital gain). Save your work from Case Problems 1 and 2. It will be needed to solve subse- quent cases. ww.wath 196 Income Tax Considerations PART FOUR FIGURE 10.2 Frojected After-Tax Cash Flow from Operations: Maegen's Magic Manor Apartments Year 6 Year 5 Year 4 Year 3 Year 2 Year 1 $2,667,600 $2.770,800 S2.677.100 Potential gross rent S2,586,600 1 $2.463.400 $2.346,100 172.100 166.200 160.600 Less: Vacancy allowance 2 103.000 176.000 98.600 $2.695,700 $2,604,600 3. $2,516.500 S2,483,100 $2,364,900 $2,170, 100 122.400 126.700 118.300 4. Add Other income 116.700 102.000 111.200 $2,727.000 $2,822.400 5. Effective gross income $2.634.800 $2.599.800 $2.272.100 $2.476.100 6 Less: Operating expenses $136,400 $141,100 7. S 131,700 Management fee $130,000 $113,600 S 123,800 8 242,300 234,100 Salary expense 226,200 218.500 204,000 211,100 9. 129,500 125,100 Utilities 120,900 116,800 109.000 112.800 43,600 10. 42,100 Insurance 40,700 39,300 36,700 38,000 11 Supplies 24,900 26,800 24,100 23.300 21,700 22,500 12 Advertising, legai. 38,500 39.300 36,700 35,500 33,100 34,300 misc. 13. Maintenance, repairs, 223,700 216,100 208,800 188,300 194,900 201.700 and replacements 14. Property taxes 375,000 375,000 375.000 300.000 300,000 300,000 15. Total expenses $1.220 300 S1.191,700 $1,006.400 $1.037 400 $1.164.100 S1,066.100 16. Net operating income $1,602.100 $1,535,300 $1,470,700 $1,265,700 $1,438,700 $1,534,700 17. Less: Interest experse 677.300 654,400 698,500 752,700 718,000 736,100 18. Depreciation 383.300 400.000 400.000 383,300 400,000 400,000 19. Taxable income (loss) $ 564.400 458,000 $372,200 $ 129,700 $302,600 $418.700 20. Times: Marginal tax rate 40 40 40 40 40 40 21. Income tax (tax $ 225,800 $ 51.900 S 183,200 $ 121,000 $ 166,700 $ 148,900 savings) 22. Net operating income $1,535,300 $1.6C2,100 $1,265,700 $1,438,700 $1,470,700 $1,534,700 23. Less: Debt service 953.500 953,500 953.500 953 500 953.500 953,500 24. Before-tax cash flow $ 648,600 $ 581,800 $312,200 $ 485,200 $517,200 $581,200 25, Less: Income taxes 225,800 183,200 166,700 148,900 _51,900 121,000 26. After-tax cash fiow 398,600 422,800 414,500 368.300 260,300 364,200 All numbers have been rounded to the nearest $100. uranges 1inancing) and the seller realizes a gain, the gain will be recognized in the year of the transaction. If the seller realizes a loss, we have seen that a portion may have to be carried forward If a transaction is a cash sale (regardless or and recognized in future taxable years. FIGURE 11.1 Estimate of Investor's Adiusted Tax Basis in Maegen's Magic Manor at Time of Disposal $13,596,700 150.000 $13,746,700 2.366.600 $11,380.100 Purchase price Add: Transaction costs Initial tax basis Less: Cumulative depreciation allowances (from Figure 10.2) Adjusted basis prior to sale Add: Selling costs (.05 x $17,800,000) Adjusted basis at time of sale 890.000 $12,270,100 *All values have been rounded to nearest $100. Determining the Character of Real Estate Rental Income CHAPTER 11 217 Estimated Income Tax Consequences of Selling Maegen's Magic Manor Apartments FIGURE 11.2 Selling price Less: Adjusted basis (from Figure 11.1) $17,800,000 12.270.100 $5,529,900 Gain on disposal Less: Gain attributable to unrecaptured depreciation (from Figure 11.1) 2.366.600 $3,163,300 Long-term capital gain ax: On recovery of depreciation (.25 x $2,366,600) On long-term capital gain (.15 x $3,163,300) Total tax liability 591,600 474.500 $1,066,100 *All values have been rounded to nearest $100. When a seller takes back a promissory note in partial payment or receives assets of like kind (i.e., real estate traded for real estate), all or a portion of a gain or loss might be deferred. The deferral is sometimes mandatory, sometimes optional, as explained later in this chapter. are high or the mortgage loans are diffleult to 6btain, sellers who provide a substanti al portion of the necessary financ- ing can greatly facilitate property disposal. Installment sales provisions in the Internal Revenue Code are intended to make this possible without the unfortunate side effect of having income tax liability exceed cash collections in the year of the transaction. Estimate of After-Tax Cash Flow from Disposal of Maegen's Magic Manor Apartments* FIGURE 11.3 Selling price $17,800,000 Less: Selling costs (from Figure 11.1) Income taxes (from Figure11.2) Mortgage balance (from Figure 9.6) $ 890,000 1,066,100 8.015.800 9.971.900 $ 7.828,100 After-tax cash flow *All values have been rounded to nearest $100. PART TWO Case Problem Allen Benedict is thinking of buying an apartment complex that is offered for sale by the firm of Getz and Fowler. The price, S2.25 million, equals the property's market value. The following statement of income and expense is presented for Benedict's consideration: The St. George Apartments Prior Year's Operating Results, Presented by Getz $351,000 and Fowler, Brokers 30 units, all lwo-bedroom apartments, 5975 par month Washer and dryer rentals 10.000 $361,000 Gross annual inceme Less operating expenses $10,000 Manager's salary 7,800 Maintenance staff (one person, part-time) 1,300 Seedy iandscapers 32.600 13.500 Property taxes $328,400 Net operating income By checking the electric meters during an inspection tour of the property, Benedict determines the occupancy rate to be about 80 percent. He learns, by talking to tenants that most have been offered inducements such as a month's free rent or special decorat- ing allowances. A check with competing apartment houses reveals that similar apart- ment units rent for about $8955 per month and that vacancies average about 5 percent. Moreover, these other apartments have pools and recreation areas that make their units worth about $20 per month more than those of the St. George, which has neither. The tax assessor states that the apartments were reassessed 12 months ago and that the current taxes are $71,400. Benedict learns that the resident manager at St. George, in addition to a $10,000 salary, gets a free apartment for her services. He also discovers other expenses: insur- ance will cost $6.50 per $1,000 of coverage, based on estimated replacement cost of about $1.8 million; workers' compensation (S140 per annum) must be paid to the state; utilities, incurred to light hallways and other common areas, cost about $95 per month for similar properties; supplies and miscellaneous expenses typically run about 0.25 percent of effective gross rent. Professional property management fees in the market area typically are about 5 percent of effective gross income. w PN THREE PART Case Problem Please refer to the case problem for Part Two. Assignment 2 of that problem called ora seven-year forecast of net operating income for the St. George Apartments. If you nave not yet completed that assignment, please do so now. Assignment: 1. Based on net operating income projection for the first year, estimate the mort- gage loan that will be available if the lender requires a debt coverage ratio of not less than 1.20. Anticipated loan terms are interest at 8.5 percent per annum, and level monthly payments to amortize the loan over 20 years. No 2. Round your mortgage loan estimate from Assignment 1 above, to the nearest discount points or loan origination fee is anticipated. ST00,000. Modify the St. George Apartments projection to derive a seven- year projection of before-tax cash flow, based on this loan. 3. Using the mortgage loan from Assignment 2 above, develop a seven-year amortization schedule for the St. George Apartments. Include an anticipated remaining mortgage balance at the end of seven years. 4. Using the forecasted future market value developed in Assignment 3 of the Case Problem for Part Two (rounded to the nearest $100,000), estimate before-tax cash flow from disposal, assuming the following: a. The property is sold at the end of the seventh year (that is, before the first debt service payment falls due for the eighth year). b. Transaction costs (brokerage, legal and accounting fees, and so forth) equal 8 percent of the selling price. Save your work. It will be needed to solve Case Problem 1 for Part Four 30 units: 1 |monthly rent rental growth: other income growth rate: $ 875.00 2.50% 2.50% 3 4 5 5.00% vacancy rate 6 7 Year 1 Year 2 Year 4 8 The St. George Apartments Reconstructed Operating Statement 9 potential gross rent 10 less: vacancy allowance 11 add: other income (laundry rental) 12 effective gross income 13 less: operating expenses 14 maintenace staff. one person p/t 15 property management fees (5% of effective gross income) 16 salary expense 17 utilities ($95 x 12 months) 18 insurance 19 supplies/misc. expenses: 25 x $299,250 (effective gross rent) 20 Seedy Landscapers 21 work comp 22 property tax 23 total expenses Broker Statement: Last Year last year reconstruction: Year 0 $ Year 3 Year 5 Year 6 351,000.00 $ 315,000.00 322,875.00 $ 330,946.88 $ 339,220.55 347,701.06 356,393.59 $ 365,303.43 15,750.00 S 10,000.00 $ 309,250.00 316,981.25 $ 324,905.78 $ 16,143.75 $ 17,385.05 $ 11,038.13 333,028.43 341,354.14 $ 349,887.99 $ 16,961.03 $ 16,547.34 $ 17,819.68 $ 18,265.17 10,000.00 $ 10,250.00 $ 10,506.25 $ 10,768.91 $ 11,314.08 $ 11,596.93 $ 358,635.19$ $ 361,000.00$ 8,399.75 $ 16,651.42 $ 22,076.26 $ 1,227.66 $ 12.599.62 $ 8,609.74$ 17,067.71 $ $ 7,800.00 $ 7,800.00 $ 7,995.00 $ 8,194.88 $ 8,824.98 $ 9,045.61 $ 15,849.06 $ 16,245.29S 17,931.76 $ $ 15,462.50 17.494.40 20,500.00 $ 23,193,87 $ $ 20,500.00 $ 1,140.00 $ 11.700.00 $ 21,012.50 21,537.81 $ 22,628.16 $ 23.773.72$ 1,168.50 $ 11,992.50 $ 1,197.71 $ 12,292.31 $ 1,258.35 $ 12.914.61 $ 1,289.81 $ 1,322.05 $ 13,237.48 $ 846.29 $ 13.568.41 $ 825.65 $ 766.70 $ 1,332.50 $ 143.50 $ 71,400.00 $ 130,190.50 $ 131,660.26 $ 137,814.77 $ 805.51 $ 867.45 $ 1,507.60 $ 162.36 $ 748.00 $ 785.87$ 1,470.83 $ 158.40 $ 1,399.96 $ 150.76 $ $ 1,300.00 $ 1,300.00 $ 1,365.81 $ 147.09 $ 1,434.96 154.53 $ 140.00 $ 71,400.00 $ 76,048.00 $ 76,048.00 $ 139,358.94$ 76,048.00 $ 76,048.00 $ 13,500.00 $ 76,048.00 $ 144,226.96 $ 140,941.71 142,564.05 $ $ 32,600.00 $ 24 179,059.50 $ 25 net operating income 26 328,400.00 $ 185,320.99$ 187,091.01 $ 193,669.49 200,412.42 $ 207,323.94 $ 214,408.23 27 28 less: 29 debt service 145,794.30 $ 39,526.68 $ 145,794.30 $ 145,794.30 $ 145,794.30$ 145,794.30$ 145,794.30 $ 54.618.12 $ 145,794.30 $ 61,529.63 $ 145,794.30 $ 33,265.20 $ 47,875.18 $ 68,613.93 $ $ 30 before tax cash flow $ 41,296.71 $ sale proceeds professional fees Loan Repayment 1231 gain 31 add: 32 building value: 33 $ less: $ 2,250,000.00 34 Year 6 Year 7 365,303.43 $ 18,265.17 $ 11,596.93 $ 358,635.19$ $ $ 374,436.01 18,721.80 $ 11,886.86 367,601.07 $ 9,045.61 $ 9,271.75 17,931.76 $ 23,773.72 $ 1,322.05 $ $ 18,380.05 $ 24,368.06 1,355.10 $ $ 13,568.41 $ 13,907.62 $ 867.45 $ 889.14 1,507.60 $ 1,545.29 $ $ 162.36 $ 166.42 $ 76,048.00 $ 85,039.00 $ 144,226.96 $ 154,922.43 $ 214,408.23 $ 212,678.64 $ 145,794.30 $ 145,794.30 $ 68,613.93 $ 66,884.34 sale proceeds professional fees $ 2,700,000.50 216,000.04 Loan Repayment $ 1,144,908.05 1231 gain $1,339,092.41 PAR Case Problem 1. Please refer to the Case Problem for Part Three. Assignment 2 of that case required you to develop a seven-year projection of before-tax cash flows from the St. George Apartments. If you have not yet completed that assignment, please do so now. Using the format illustrated in Figure 10.2 (or an alterna- tive format prescribed by your instructor), incorporate income tax conse- quences and extend the forecast to include after-tax cash flow from operation. In developing your projection, make the following assumptions: a. Eighty percent of the purchase price is attributable to the buildings, and the taxpayer is in the 40 percent marginal income tax bracket. b. Because she is engaged full time as a real estate practitioner, she is not subject to the passive activity rules. c. She will incur no liability for the alternative minimum tax during the pro- jection period. 2. Assignment 4 of the Case Problem for Part Three asks you to estimate before tax cash from the disposal of the St. George after seven years. If you have not yet done so, please complete that assignment now. Using the format illus- trated in Figures 11.1, 11.2, and 11.3 (or the format recommended by your instructor), extend the forecast to include after-tax cash flow from disposal assuming that the gain on disposal will be taxed at 25 percent (if it represents unrecaptured depreciation) or 15 percent (if it is long-term capital gain). Save your work from Case Problems 1 and 2. It will be needed to solve subse- quent cases. ww.wath 196 Income Tax Considerations PART FOUR FIGURE 10.2 Frojected After-Tax Cash Flow from Operations: Maegen's Magic Manor Apartments Year 6 Year 5 Year 4 Year 3 Year 2 Year 1 $2,667,600 $2.770,800 S2.677.100 Potential gross rent S2,586,600 1 $2.463.400 $2.346,100 172.100 166.200 160.600 Less: Vacancy allowance 2 103.000 176.000 98.600 $2.695,700 $2,604,600 3. $2,516.500 S2,483,100 $2,364,900 $2,170, 100 122.400 126.700 118.300 4. Add Other income 116.700 102.000 111.200 $2,727.000 $2,822.400 5. Effective gross income $2.634.800 $2.599.800 $2.272.100 $2.476.100 6 Less: Operating expenses $136,400 $141,100 7. S 131,700 Management fee $130,000 $113,600 S 123,800 8 242,300 234,100 Salary expense 226,200 218.500 204,000 211,100 9. 129,500 125,100 Utilities 120,900 116,800 109.000 112.800 43,600 10. 42,100 Insurance 40,700 39,300 36,700 38,000 11 Supplies 24,900 26,800 24,100 23.300 21,700 22,500 12 Advertising, legai. 38,500 39.300 36,700 35,500 33,100 34,300 misc. 13. Maintenance, repairs, 223,700 216,100 208,800 188,300 194,900 201.700 and replacements 14. Property taxes 375,000 375,000 375.000 300.000 300,000 300,000 15. Total expenses $1.220 300 S1.191,700 $1,006.400 $1.037 400 $1.164.100 S1,066.100 16. Net operating income $1,602.100 $1,535,300 $1,470,700 $1,265,700 $1,438,700 $1,534,700 17. Less: Interest experse 677.300 654,400 698,500 752,700 718,000 736,100 18. Depreciation 383.300 400.000 400.000 383,300 400,000 400,000 19. Taxable income (loss) $ 564.400 458,000 $372,200 $ 129,700 $302,600 $418.700 20. Times: Marginal tax rate 40 40 40 40 40 40 21. Income tax (tax $ 225,800 $ 51.900 S 183,200 $ 121,000 $ 166,700 $ 148,900 savings) 22. Net operating income $1,535,300 $1.6C2,100 $1,265,700 $1,438,700 $1,470,700 $1,534,700 23. Less: Debt service 953.500 953,500 953.500 953 500 953.500 953,500 24. Before-tax cash flow $ 648,600 $ 581,800 $312,200 $ 485,200 $517,200 $581,200 25, Less: Income taxes 225,800 183,200 166,700 148,900 _51,900 121,000 26. After-tax cash fiow 398,600 422,800 414,500 368.300 260,300 364,200 All numbers have been rounded to the nearest $100. uranges 1inancing) and the seller realizes a gain, the gain will be recognized in the year of the transaction. If the seller realizes a loss, we have seen that a portion may have to be carried forward If a transaction is a cash sale (regardless or and recognized in future taxable years. FIGURE 11.1 Estimate of Investor's Adiusted Tax Basis in Maegen's Magic Manor at Time of Disposal $13,596,700 150.000 $13,746,700 2.366.600 $11,380.100 Purchase price Add: Transaction costs Initial tax basis Less: Cumulative depreciation allowances (from Figure 10.2) Adjusted basis prior to sale Add: Selling costs (.05 x $17,800,000) Adjusted basis at time of sale 890.000 $12,270,100 *All values have been rounded to nearest $100. Determining the Character of Real Estate Rental Income CHAPTER 11 217 Estimated Income Tax Consequences of Selling Maegen's Magic Manor Apartments FIGURE 11.2 Selling price Less: Adjusted basis (from Figure 11.1) $17,800,000 12.270.100 $5,529,900 Gain on disposal Less: Gain attributable to unrecaptured depreciation (from Figure 11.1) 2.366.600 $3,163,300 Long-term capital gain ax: On recovery of depreciation (.25 x $2,366,600) On long-term capital gain (.15 x $3,163,300) Total tax liability 591,600 474.500 $1,066,100 *All values have been rounded to nearest $100. When a seller takes back a promissory note in partial payment or receives assets of like kind (i.e., real estate traded for real estate), all or a portion of a gain or loss might be deferred. The deferral is sometimes mandatory, sometimes optional, as explained later in this chapter. are high or the mortgage loans are diffleult to 6btain, sellers who provide a substanti al portion of the necessary financ- ing can greatly facilitate property disposal. Installment sales provisions in the Internal Revenue Code are intended to make this possible without the unfortunate side effect of having income tax liability exceed cash collections in the year of the transaction. Estimate of After-Tax Cash Flow from Disposal of Maegen's Magic Manor Apartments* FIGURE 11.3 Selling price $17,800,000 Less: Selling costs (from Figure 11.1) Income taxes (from Figure11.2) Mortgage balance (from Figure 9.6) $ 890,000 1,066,100 8.015.800 9.971.900 $ 7.828,100 After-tax cash flow *All values have been rounded to nearest $100. PART TWO Case Problem Allen Benedict is thinking of buying an apartment complex that is offered for sale by the firm of Getz and Fowler. The price, S2.25 million, equals the property's market value. The following statement of income and expense is presented for Benedict's consideration: The St. George Apartments Prior Year's Operating Results, Presented by Getz $351,000 and Fowler, Brokers 30 units, all lwo-bedroom apartments, 5975 par month Washer and dryer rentals 10.000 $361,000 Gross annual inceme Less operating expenses $10,000 Manager's salary 7,800 Maintenance staff (one person, part-time) 1,300 Seedy iandscapers 32.600 13.500 Property taxes $328,400 Net operating income By checking the electric meters during an inspection tour of the property, Benedict determines the occupancy rate to be about 80 percent. He learns, by talking to tenants that most have been offered inducements such as a month's free rent or special decorat- ing allowances. A check with competing apartment houses reveals that similar apart- ment units rent for about $8955 per month and that vacancies average about 5 percent. Moreover, these other apartments have pools and recreation areas that make their units worth about $20 per month more than those of the St. George, which has neither. The tax assessor states that the apartments were reassessed 12 months ago and that the current taxes are $71,400. Benedict learns that the resident manager at St. George, in addition to a $10,000 salary, gets a free apartment for her services. He also discovers other expenses: insur- ance will cost $6.50 per $1,000 of coverage, based on estimated replacement cost of about $1.8 million; workers' compensation (S140 per annum) must be paid to the state; utilities, incurred to light hallways and other common areas, cost about $95 per month for similar properties; supplies and miscellaneous expenses typically run about 0.25 percent of effective gross rent. Professional property management fees in the market area typically are about 5 percent of effective gross income. w PN THREE PART Case Problem Please refer to the case problem for Part Two. Assignment 2 of that problem called ora seven-year forecast of net operating income for the St. George Apartments. If you nave not yet completed that assignment, please do so now. Assignment: 1. Based on net operating income projection for the first year, estimate the mort- gage loan that will be available if the lender requires a debt coverage ratio of not less than 1.20. Anticipated loan terms are interest at 8.5 percent per annum, and level monthly payments to amortize the loan over 20 years. No 2. Round your mortgage loan estimate from Assignment 1 above, to the nearest discount points or loan origination fee is anticipated. ST00,000. Modify the St. George Apartments projection to derive a seven- year projection of before-tax cash flow, based on this loan. 3. Using the mortgage loan from Assignment 2 above, develop a seven-year amortization schedule for the St. George Apartments. Include an anticipated remaining mortgage balance at the end of seven years. 4. Using the forecasted future market value developed in Assignment 3 of the Case Problem for Part Two (rounded to the nearest $100,000), estimate before-tax cash flow from disposal, assuming the following: a. The property is sold at the end of the seventh year (that is, before the first debt service payment falls due for the eighth year). b. Transaction costs (brokerage, legal and accounting fees, and so forth) equal 8 percent of the selling price. Save your work. It will be needed to solve Case Problem 1 for Part Four 30 units: 1 |monthly rent rental growth: other income growth rate: $ 875.00 2.50% 2.50% 3 4 5 5.00% vacancy rate 6 7 Year 1 Year 2 Year 4 8 The St. George Apartments Reconstructed Operating Statement 9 potential gross rent 10 less: vacancy allowance 11 add: other income (laundry rental) 12 effective gross income 13 less: operating expenses 14 maintenace staff. one person p/t 15 property management fees (5% of effective gross income) 16 salary expense 17 utilities ($95 x 12 months) 18 insurance 19 supplies/misc. expenses: 25 x $299,250 (effective gross rent) 20 Seedy Landscapers 21 work comp 22 property tax 23 total expenses Broker Statement: Last Year last year reconstruction: Year 0 $ Year 3 Year 5 Year 6 351,000.00 $ 315,000.00 322,875.00 $ 330,946.88 $ 339,220.55 347,701.06 356,393.59 $ 365,303.43 15,750.00 S 10,000.00 $ 309,250.00 316,981.25 $ 324,905.78 $ 16,143.75 $ 17,385.05 $ 11,038.13 333,028.43 341,354.14 $ 349,887.99 $ 16,961.03 $ 16,547.34 $ 17,819.68 $ 18,265.17 10,000.00 $ 10,250.00 $ 10,506.25 $ 10,768.91 $ 11,314.08 $ 11,596.93 $ 358,635.19$ $ 361,000.00$ 8,399.75 $ 16,651.42 $ 22,076.26 $ 1,227.66 $ 12.599.62 $ 8,609.74$ 17,067.71 $ $ 7,800.00 $ 7,800.00 $ 7,995.00 $ 8,194.88 $ 8,824.98 $ 9,045.61 $ 15,849.06 $ 16,245.29S 17,931.76 $ $ 15,462.50 17.494.40 20,500.00 $ 23,193,87 $ $ 20,500.00 $ 1,140.00 $ 11.700.00 $ 21,012.50 21,537.81 $ 22,628.16 $ 23.773.72$ 1,168.50 $ 11,992.50 $ 1,197.71 $ 12,292.31 $ 1,258.35 $ 12.914.61 $ 1,289.81 $ 1,322.05 $ 13,237.48 $ 846.29 $ 13.568.41 $ 825.65 $ 766.70 $ 1,332.50 $ 143.50 $ 71,400.00 $ 130,190.50 $ 131,660.26 $ 137,814.77 $ 805.51 $ 867.45 $ 1,507.60 $ 162.36 $ 748.00 $ 785.87$ 1,470.83 $ 158.40 $ 1,399.96 $ 150.76 $ $ 1,300.00 $ 1,300.00 $ 1,365.81 $ 147.09 $ 1,434.96 154.53 $ 140.00 $ 71,400.00 $ 76,048.00 $ 76,048.00 $ 139,358.94$ 76,048.00 $ 76,048.00 $ 13,500.00 $ 76,048.00 $ 144,226.96 $ 140,941.71 142,564.05 $ $ 32,600.00 $ 24 179,059.50 $ 25 net operating income 26 328,400.00 $ 185,320.99$ 187,091.01 $ 193,669.49 200,412.42 $ 207,323.94 $ 214,408.23 27 28 less: 29 debt service 145,794.30 $ 39,526.68 $ 145,794.30 $ 145,794.30 $ 145,794.30$ 145,794.30$ 145,794.30 $ 54.618.12 $ 145,794.30 $ 61,529.63 $ 145,794.30 $ 33,265.20 $ 47,875.18 $ 68,613.93 $ $ 30 before tax cash flow $ 41,296.71 $ sale proceeds professional fees Loan Repayment 1231 gain 31 add: 32 building value: 33 $ less: $ 2,250,000.00 34 Year 6 Year 7 365,303.43 $ 18,265.17 $ 11,596.93 $ 358,635.19$ $ $ 374,436.01 18,721.80 $ 11,886.86 367,601.07 $ 9,045.61 $ 9,271.75 17,931.76 $ 23,773.72 $ 1,322.05 $ $ 18,380.05 $ 24,368.06 1,355.10 $ $ 13,568.41 $ 13,907.62 $ 867.45 $ 889.14 1,507.60 $ 1,545.29 $ $ 162.36 $ 166.42 $ 76,048.00 $ 85,039.00 $ 144,226.96 $ 154,922.43 $ 214,408.23 $ 212,678.64 $ 145,794.30 $ 145,794.30 $ 68,613.93 $ 66,884.34 sale proceeds professional fees $ 2,700,000.50 216,000.04 Loan Repayment $ 1,144,908.05 1231 gain $1,339,092.41
