Ten years ago you purchased a small apartment complex for $900,000. You borrowed $700,000 at 5 percent for 25 years with monthly payments. The original depreciable basis was $750,000 and you have used 27%-year straight-line depreciation over the five-year holding period. Assume there was no personal property associated with the acquisition. Assume no capital expenditures have been made since acquisition. Assume 6 percent selling costs, 33 percent ordinary income tax rate, a 15 percent capital gains tax rate, and a 25 percent recapture rate. Ignore the mid-month convention. If you sell the property today for $1,250,000 in a fully-taxable sale what will be the after-tax equity reversion (cash flow) from the sale (rounded to $Thousands)?.

Ten years ago you purchased a small apartment complex for $900,000. You borrowed $700,000 at 5 percent for 25 years with monthly payments. The original depreciable basis was $750,000 and you have used 27%-year straight-line depreciation over the five-year holding period. Assume there was no personal property associated with the acquisition. Assume no capital expenditures have been made since acquisition. Assume 6 percent selling costs, 33 percent ordinary income tax rate, a 15 percent capital gains tax rate, and a 25 percent recapture rate. Ignore the mid-month convention. If you sell the property today for $1,250,000 in a fully-taxable sale what will be the after-tax equity reversion (cash flow) from the sale (rounded to $Thousands)?.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 11P

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