Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
A property produces a first year new operating income of $200,000. It was pruchased for $2,000,000 with an 80% LTV 30 year loan at 7% interest with annual payments. The land portion is valued at $200,000 and the building portion is valued at $1,800,000. Depreciation is straight line over 39 years.
a. If taxes are 25%, what is the After tax operating cash flow for the first year?
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