Please explain how the answer and formulas are derived. What is FC and how is it calculated?

Tridall Real Estate Holdings is considering the purchase of a shopping mall which has a current price of $10 000 000. Tridall is a very profitable company. If Tridall purchases the shopping mall, management expects to sell it at the end of 15 years for $16 000 000. Shopping malls have a CCA rate of 5%. Tridall's tax rate is 40% and it uses an MARR of 12% for real estate investments. Be sure to consider all relevant aspects of the Canadian Income Tax Act that apply to this investment decision. (a) What is the after-tax present value cost of this investment for Tridall? (Note that Tridall will be required to pay a capital gains tax on the sale at the end of 15 years.) (b) Tridall expects that operating and maintenance costs will be $2.5 million per year. How much rent does Tridall need to collect each year from its shopping mall tenants for this venture to be economic? i= 12% m=15 FC-10.0 p=52 t:402 + m ne) + 2 la Purchase Price $10.0 million ($ millions) ) Depr Tax Savings (Year 1-715) D = p F8/2 = DTS, -ED, D2 = (FC-D.)p=> DTS-t Dz PUTS = (PIF :, ) [ DTS, +0752 (PIA, Esp, m-1) = (PIF 18,1 ) [0.1 +0.195 (PIA, 12%-57, 14)] (0.8929) (0.140.195(5.2954)] = $1,01 million .:D, = 0.250 4 DTS, -0,1 At E04 15: Dz 0.488 DTS,-0.195 BUL FC (1-P)" + FC (1-P) PP =t5.06.95)" +5.01,95)." - $4,75 million on at Year is 1. Depreciation recapture tax (10.0-475)(0,4) 2. Capital gains tax Chalf the gain is taxable) (16.0-10.0) (0.5) (0.4) = $1.2 million (10.0-1.01) 3. Proceeds of the sale $160 million .: ATC = 8,99 + (PIF 128, 15) (-16.0 +2.1+1.27 = 6,665 million [ The present value after-tax cost of the shopping mall is $6.7 million = $ 2.1 million FC - PUTS Tridall Real Estate Holdings is considering the purchase of a shopping mall which has a current price of $10 000 000. Tridall is a very profitable company. If Tridall purchases the shopping mall, management expects to sell it at the end of 15 years for $16 000 000. Shopping malls have a CCA rate of 5%. Tridall's tax rate is 40% and it uses an MARR of 12% for real estate investments. Be sure to consider all relevant aspects of the Canadian Income Tax Act that apply to this investment decision. (a) What is the after-tax present value cost of this investment for Tridall? (Note that Tridall will be required to pay a capital gains tax on the sale at the end of 15 years.) (b) Tridall expects that operating and maintenance costs will be $2.5 million per year. How much rent does Tridall need to collect each year from its shopping mall tenants for this venture to be economic? i= 12% m=15 FC-10.0 p=52 t:402 + m ne) + 2 la Purchase Price $10.0 million ($ millions) ) Depr Tax Savings (Year 1-715) D = p F8/2 = DTS, -ED, D2 = (FC-D.)p=> DTS-t Dz PUTS = (PIF :, ) [ DTS, +0752 (PIA, Esp, m-1) = (PIF 18,1 ) [0.1 +0.195 (PIA, 12%-57, 14)] (0.8929) (0.140.195(5.2954)] = $1,01 million .:D, = 0.250 4 DTS, -0,1 At E04 15: Dz 0.488 DTS,-0.195 BUL FC (1-P)" + FC (1-P) PP =t5.06.95)" +5.01,95)." - $4,75 million on at Year is 1. Depreciation recapture tax (10.0-475)(0,4) 2. Capital gains tax Chalf the gain is taxable) (16.0-10.0) (0.5) (0.4) = $1.2 million (10.0-1.01) 3. Proceeds of the sale $160 million .: ATC = 8,99 + (PIF 128, 15) (-16.0 +2.1+1.27 = 6,665 million [ The present value after-tax cost of the shopping mall is $6.7 million = $ 2.1 million FC - PUTS