taxes and property

dandman

1) In the band of investment why doesnt the cost of debt account for the tax rate, like in other readings? I would think that if the tax effect wasnt accounted for in weighted rate(denominator), then it should be accounted for in net operating income(the numerator). But NOI is before taxes. Therefore the tax effect is ignored?

2) Please refer to Question 4 on P42 of V5- In the vignette, Salazar is discussing the effect of higher taxes, which arent included in either gross income or NOI. However, the answer emphazises how the DC approach considers costs. The point I'm making is that the DC approach still ignores taxes, just like the GIM approach. Thus,shouldnt the values derived from both methods should be equal?

ryanlb

Which tax rate do you want to use? Income tax rate or recaptured depreciation tax?

NO EXCUSES

wilslm

Income tax rate. recaptured depreciation tax is specifically for recaptured depreciation