Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. warehouse. analysis has resulted in the following

warehouse. Analysis has resulted in the following facts: - The asking...

90.2K

Verified Solution

Question

Accounting

image
warehouse. Analysis has resulted in the following facts: - The asking price is $450,000. - There are 10,000 square feet of leasable area. - The expected rent is $5 per square foot per year; rents are expected to increase 5 percent per year. Since the property is leased to an AAA-grade tenant for 25 more years, no vacancy factor is deducted. - The tenant will pay all operating expenses except property taxes and insurance. These two expenses will equal 20 percent of the effective gross income (EGI) each year. - The investor can borrow 80 percent of the total cost for 20 years at an interest rate of 7 pefcent with monthly payments and upfront financing costs equal to 3 percent of the amount borrowed. - 85 percent of the total acquisition cost is depreciable over the useful life of 39 years using the straight-line method (no personal property). - The investor expects to sell the investment at the end of year 5 . - The investor's ordinary income tax rate is 30 percent. - No capital expenditures have been made since acquisition. Compute the after-tax cash flows from annual rental operations over the five-year housing period

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Edison is currently an all-equity firm with an expected return of 12%. Edison's firm value is $500m....

Finance
Q

A) Put the steps in activation of cellular immunity in the correct order: 1. infected cells are...

Medical Sciences
Q

Charles Darwin proposed the theory of biological evolution by natural selection Darwin de layed publishing...

Biology
Q

Oxidation involves the removal of oxygen atoms from a molecule occurs when an atom accepts...

Biology
Q

Example 33 A long string with a charge of per unit length passes through an...

Physics
Q

The monthly profit for a company that makes picture frames depends on the price per...

Calculus
Q

5 6 5 4 3 2 1 Ty 2 3 4 5 2 3 6...

Algebra
Q

Since accounting operates with a double entry system, if one account is misstated, then one...

Accounting
Q

Warranties Aylmer uses the service-type warranty (revenue-based approach) to account for any necessary adjustments to...

Accounting
Q

Otto's Tune-Up Shop follows the revenue recognition principle. Otto services a car on Au-gust 31....

Accounting
Q

Pharoah Energy Company owns several gas stations, Management is looking to open a new stathon...

Finance
Q

Question 11 (1.25 points) Safety Inc.'s stock has a required rate of return of 9.5%,...

Finance