Math_Practice_Exam_2_answers

Math_Practice_Exam_2_answers - 1. You bought a strip center...

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1. You bought a strip center that contains a Saver’s, Pizza Pit, H&R Block and several other stores. Purchase Price $4,000,000 Land Value $750,000 5% Potential Gross Income Year 2 $250,000 Operating Expense (as a % of EGI) Year 2 30% Property Taxes Year 2 $35,000 Income Tax Rate 36% Use Depreciation Period for commercial real estate. A. What will be the NOI in Year 2? __ $131,250 _____ B. What will be the taxable income on the property in Year 2? __ $47,917_______ C. What will the After Tax Cash Flow be in Year 2? $114,000__________ D. What will the depreciation recapture tax be if you hold the property 5 years (assume a 25% recapture tax rate)? ___$104,167_____________ 2. You are mortgage shopping. Calculate the effective interest rate for each of the following $350,000 mortgages for a seven year time period. (That’s how long you expect to own the house.) A. MAD-DOG’S MORTGAGE CO.: fixed rate mortgage 5.5%, monthly compounding, with 4 points for a period of 30 years. ______6.24%_________
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Math_Practice_Exam_2_answers - 1. You bought a strip center...

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