Another ERAT question

I’m working an equity reversion after tax problem from Schweser’s L2 practice exam book. It’s the 1st session afternoon test, number 94. Anyway, the way I understand the formula works is Selling Price - Selling Costs - Outstanding mortgage balance - taxes payable. It appears I’m screwing up the problem because I’m actually trying to calculate what the actual outstanding mortgage balance is at the end of the period. In their solution, they are just subtracting the original mortgage balance which assumes that there were no payments made in the five years.

Checked for errata…there is none. Looks like the reason I screwed it up is because it’s an IO mortgage, so you don’t need to calculated the outstanding mortgage balance. So frustrating!

I just did this one too, I didn’t even think of IO or PO…hard problem but I guess if you work through how an Income statement works it kind of makes sense, ERAT, what you want, is “what’s leftover” right? So I sold it for this much, less whats left on the mortgage, less taxes I owe, gives me leftover equity? Not sure if that helps but when I saw this I had no idea how to do it, then I was like ohh ok…