The NOI is $40,000; there are $5,000 in tenant improvement expenditures paid for by the landlord; there is a $200,000 interest-only loan at 8 percent annual interest; the depreciable cost basis of this residential property is $300,000; the owner's tax bracket is 33 percent. What is the Equity After-Tax Cash Flow EATCF)?

Question

Quizplus · Accepted Answer

EATCF = NOI - (Depreciation + Interest + Tenant Improvement Expenditures) * (1 - Tax Rate)EATCF = $40,000 - ($300,000 / 27.5 * 0.08 + $200,000 * 0.08 + $5,000) * (1 - 0.33)EATCF = $40,000 - ($22,222.22 + $16,000 + $5,000) * 0.67EATCF = $40,000 - $27,800 * 0.67EATCF = $40,000 - $18,694EATCF = $21,306

The NOI Is $40,000; There Are $5,000 in Tenant Improvement