Use the following information to answer the remaining questions on this homework assignment.

You have been tasked with analyzing the acquisition of a residential apartment complex. The purchase price is $14,000,000 and the holding period is 5-years. The NOI is forecast is shown below.

	Year 1	Year 2	Year 3	Year 4	Year 5
NOI	$900,000	$915,000	$930,000	$940,000	$950,000

Additional information:

• The appraisal indicates that the land value represents 30% of the purchase price.
• The property will be financed with a loan with a 30-year amortization period with monthly payments and an interest rate of 4.0%. The minimum debt coverage ratio is 1.25.
• The NOI is expected to grow at 2% after the forecast period and the terminal cap rate is assumed to be 6.25%.
• The target investor faces an income tax rate of 35%, tax rate on depreciation recapture of 25%, and a capital gains tax rate of 15%.

1. What is the first year after-tax cash flow to equity?

2. What is the first year equity dividend rate?