HP 12C#ABA hp 12c_solutions handbook_English_E.pdf - Page 15

Marginal Tax Rate of 50% and a vacancy rate of 7%, what are the After

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125 6 125.00 Decline in balance factor. 35 7 35.00 Marginal Tax Rate. 6 8 6.00 Potential Gross Income growth rate. 2.5 9 2.50 Operating cost growth. 5 .0 5.00 Vacancy rate. 1.00 Year 1 -1,020.88 2.00 ATCF1 Year 2 -822.59 3.00 ATCF2 Year 3 -598.85 4.00 ATCF3 Year 4 -72.16 5.00 ATCF4 Year 5 232.35 6.00 ATCF5 Year 6 565.48 7.00 ATCF6 Year 7 928.23 8.00 ATCF7 Year 8 1,321.62 9.00 ATCF8 Year 9 1,746.81 10.00 ATCF9 Year 10 -1,020.88 ATCF10 Example 2: An office building was purchased for $1,400,000. The value of depreciable improvements is $1,200,000.00 with a 35 year economic life. Straight line depreciation will be used. The property is financed with a $1,050,000 loan. The terms of the loan are 9.5% interest and $9,173.81 monthly payments for 25 years. The office building generates a Potential Gross Income of $175,2000 which grows at a 3.5% annual rate. The operating cost is $40,296.00 with a 1.6% annual growth rate. Assuming a Marginal Tax Rate of 50% and a vacancy rate of 7%, what are the After- Tax Cash Flows for the first 5 years? Keystrokes Display CLEAR 1050000 9173.81 9.5 175,200.00 Potential Gross Income. 14

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14
Example 2:
An office building was purchased for $1,400,000. The value
of depreciable improvements is $1,200,000.00 with a 35 year economic
life. Straight line depreciation will be used. The property is financed with a
$1,050,000 loan. The terms of the loan are 9.5% interest and $9,173.81
monthly payments for 25 years. The office building generates a Potential
Gross Income of $175,2000 which grows at a 3.5% annual rate. The
operating cost is $40,296.00 with a 1.6% annual growth rate. Assuming a
Marginal Tax Rate of 50% and a vacancy rate of 7%, what are the After-
Tax Cash Flows for the first 5 years?
125
6
125.00
Decline in balance factor.
35
7
35.00
Marginal Tax Rate.
6
8
6.00
Potential Gross Income growth rate.
2.5
9
2.50
Operating cost growth.
5
.0
5.00
Vacancy rate.
1.00
-1,020.88
Year 1
ATCF
1
2.00
-822.59
Year 2
ATCF
2
3.00
-598.85
Year 3
ATCF
3
4.00
-72.16
Year 4
ATCF
4
5.00
232.35
Year 5
ATCF
5
6.00
565.48
Year 6
ATCF
6
7.00
928.23
Year 7
ATCF
7
8.00
1,321.62
Year 8
ATCF
8
9.00
1,746.81
Year 9
ATCF
9
10.00
-1,020.88
Year 10
ATCF
10
Keystrokes
Display
CLEAR
1050000
9173.81
9.5
175,200.00
Potential Gross Income.