Use the following information to answer questions 38 -50

Commercial Property

Leasable Space = 300,000 sq ft Cap Expenditures =20% of EGI

Average Annual Rent = $17.00/sq ft LTV = 80%

Average Annual Rent Grwth = 2.5%/year Loan Interest Rate = 6%

V&C Losses = 8% of PGI Amortization = 30 yrs

Operating Expenses = 35% of EGI % Bldg/Total Value = 75%

Miscellaneous Income = $1.50/sq ft Corporate Tax Rate = 30%

MI Annual Growth = 2%/year Cap Gains Tax Rate = 15%

Going-out Cap Rate = 10.5% Accum Dep Tax Rate = 25%

Discount Rate = 10% Years of Ownership = 5 years

Selling Expenses = 6% Purchase Price = $22.5M

What are the taxes due at the end of the second year?

What is the amount of depreciation recapture due the government upon sale of the property?

What are the taxes due on the sale of the property?

What is the after-tax equity reversion from the sale of the property?

What is your year 1 debt coverage ratio?

What is the year 1 break-even ratio excluding capital expenditures?

What is the operating expense ratio?

What is the going-in cap rate?

What is the equity dividend rate?

What is the IRR of the before-tax unlevered cash flows?

What is the IRR the before-tax levered cash flows?

What is the net present value of the after-tax levered cash flows?