The asking price for an apartment building is $1,000,000; rents are estimated at $200,000 during the first year and are expected to grow at 5 percent per year. Vacancies and collection losses are expected to be 10 percent of rents. Operating expenses will be 35% of effective gross income. Buildings make up 90% of total value. A 20-year FRM for 70% of the purchase price can be obtained at 10 percent interest. The property is expected to appreciate in value at 3% per year and is expected to be owned for two years and then sold. (assume CG tax rate of 20% and depreciation recapture tax rate of 25%. Income tax rate is 28%) Q3. Write down the before and after tax cash flows statements for years 1 and 2. (1 point) Q4. Does this property enjoy Tax Shelter? Explain why or why not. (0.5 point) Does this property enjoy Deep Tax Shelter? Explain why or why not. (0.5 point) The asking price for an apartment building is $1,000,000; rents are estimated at $200,000 during the first year and are expected to grow at 5 percent per year. Vacancies and collection losses are expected to be 10 percent of rents. Operating expenses will be 35% of effective gross income. Buildings make up 90% of total value. A 20-year FRM for 70% of the purchase price can be obtained at 10 percent interest. The property is expected to appreciate in value at 3% per year and is expected to be owned for two years and then sold. (assume CG tax rate of 20% and depreciation recapture tax rate of 25%. Income tax rate is 28%) Q3. Write down the before and after tax cash flows statements for years 1 and 2. (1 point) Q4. Does this property enjoy Tax Shelter? Explain why or why not. (0.5 point) Does this property enjoy Deep Tax Shelter? Explain why or why not. (0.5 point)