Problem 2. ATCF from Building Operations

You have purchased a multi tenant office building for $15,000,000. Your acquisition costs associated with this purchase are $25,000. The estimated land value is $3,000,000, of which you estimate the depreciable land portion at $1,000,000. You estimate the 7 year property at a value of $2,000,000. You have arranged a 70% LTV, 7 year mortgage at a 5.25% interest rate with 2 points and a 25 year amortization period. Your projected NOI in the next two years is $1,200,000 and 1,250,000 which includes projected CAPEX (above line) of $100,000 and $102,000. Your marginal tax rate is 43.4%.

What is your debt service for the first 2 years?

What is your BTCF for the first 2 years?

What is your interest expense for the first 2 years?

What is your land depreciation for the first 2 years?

What is your 7-year depreciation for the first 2 years?

What is your building depreciation for the first 2 years?

What is your amortized finance cost for the first 2 years?

What is your taxable income for the first 2 years?

What is your tax due for the first 2 years?

What is your ATCF for the first 2 years?