Reading 46: Investment Analysis- LOS c～ Q1 Investment, following, investing, building, equity

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LOS c: Calculate the after-tax cash flow and the after-tax equity reversion from real estate properties.

Q1. Assume you are considering investing in an apartment building with the following estimated financial characteristics:

• Net operating income (NOI) = $60,000.
• Net operating income growth rate = 5% per year.
• Tax depreciation = $10,000 per year.
• Annual interest expense = $9,000.
• Annual debt service expense = $12,000.
• Equity investors marginal income tax rate = 36%.
• Investment horizon = four years.

The year-2 and year-3 cash flow after taxes is closest to:

A)   CFAT₂ = $31,600 and CFAT₃ = $33,400.

B)   CFAT₂ = $35,160 and CFAT₃ = $37,176.

C)   CFAT₂ = $33,240 and CFAT₃ = $37,176.

 

[此贴子已经被作者于2009-3-10 10:14:46编辑过]

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