What is the cash flow after debt service before taxes

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For the following questions, use these assumptions: N.O.I. $80,000 Cap Gains Tax Rate 20 % Current Market Cap Rate 8% Recapture Tax Rate 25 % Loan Amount $ 750,000 Ordinary Tax Rate 33% Interest Rate 6 % Principal Payment Annually $3,000 1. What is the estimated value of this property? 2. If the value is $900,000, what is the loan to value ratio? 3. What is the cash flow after debt service before taxes? 4. If the value increases to $950,000 in one year from an original value of $900,000, what is the total cash on cash return if the property is purchased with cash (all-equity investment) and no debt? 5. What is the leveraged total return (return on cash invested) with the loan in place above and an original value of $900,000 that has appreciated to $950,000? 6. If depreciation expense for year 1 is $35,000 what is the taxable income (loss)? 7. If the property is sold for $1,200,000 in 10 years, there are not any additional capital improvements and the original cost is $900,000, what is the taxable gain on sale? (Use the above deprec expense)

Reference no: EM131892757

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