the investment provides gross revenue (if fully occupied) of 250,000, a vacancy rate of 4%, and operating expenses of 15,000. The property costs 1 million. The depreciation expense onthe property is 2.6% of the cost in the first year and 1.3% of the cost over the next several years. The tax rate is 35%. The after-tax cash flow in year 1 from the potential investment is:
Answer is 155, 350 it’s easy.
((250000*.96) - 15000 - 26000)* .65 129350 + 26k cuz depreciation doesn’t affect the cash flow. 155350