batman119

 4-  A real estate investment with the following characteristics. Purchase price=2.5million, down payment is $ 500000, financing at 10%, with 20 annual end year payments, gross annual rents are $ 300000, depreciation is $ 600000/year, maintenance and taxes are $ 35000/year, tax rate=35%, find the first year after tax cash flow of real estate investment?

depreciation =60,000?

1.N=20 I/Y=10 PV=2,000,000 FV=0 CPT= PMT (234,919) it is the annual payment
2. Interest expense: (2.5m-0.5m)*10%= 200,000
3. Principal payment = 234,919-200,000=34,919
4 .First year after tax CF= {300,000  -200,000- 60,000 - 35000} *(1-35%) -34919 +60,000=28331

First year after tax CF=(Gross annual rents-interest payment-dep.- main. and tax )*(1 -t.r) - principal payment +dep.