Landlords, husband and wife, sell their 6family building in the open market. You are the prospective buyer and you agree on a selling price of $ 2,100,000. After negotiations the sellers agree to accept $ 200,000 down payment and become the mortgagee instead of the bank. They will accept your proposal only if you prove to them that is to their best interest to sell the property to you under this installment plan.

The terms are as follows:

1. Interest rate 5%
2. Term 15 Years.

Note:

1. Assume that their capital gain is 90% of the selling price
2. Also estimate capital gain tax rate at 20% if they sell the building and receive the total amount at closing.
3. If they accept your proposal assume a capital gain tax rate at 13%(taxable capital gains on amounts above ABOVE $ 50,000). Use interest tax rate @ 15%

Questions.

1. Complete the worksheet in an excel format based on the installment sale method. (Use the amortization table provided to you in the brightspace.)
2. Compare the final results of income and taxes between a complete sale and installment

Sale that you will use to convince the sellers to sell under the installment method.

1. Your explanations will be about taxes, Interest and cash flow.