Case 1 -- from Barrett Slade F10 student spreadsheets

Case 1 -- from Barrett Slade F10 student spreadsheets -...

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Sales price (total property basis) $350,000 Land value $100,000 $250,000 Cash down payment required by lender $75,000 Loan amount $275,000 Mortgage interest rate 7% Mortgage terms (monthly payments) 25 years 50,000 Vacancy rate (expressed as % of PGI) 6% 31% Length of time you will hold the property before sale 5 years Your required rate of return (annualized) on this type of investment 15% Your MAGI (no passive loss) $170,000 Predicted sales price in 5 years $400,000 Sales expenses (including commissions, closing costs, etc.) 8% Your marginal tax rate (all five years) 28% Capital gains tax rate (federal is 15% until 2009; then 20%) 20% 25% Does this property meet your investment goals? Information used with permission from Barrett Slade, BYU School of Mgt. Using the following information, you are to decide whether you will invest in a commercial building Depreciable improvement value (commercial depreciation = 39 yrs s/l; residential depreciation = 27.5 yrs s/l) First year's Potential Gross Income (PGI) -- PGI increases 5% per year
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This note was uploaded on 01/11/2012 for the course CM 426 taught by Professor Markhutchings during the Winter '12 term at BYU.

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Case 1 -- from Barrett Slade F10 student spreadsheets -...

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