Before Tax Cash Flow SALE 4241604 Debt Service 296872 296872 296872 296872

Before tax cash flow sale 4241604 debt service 296872

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(+) Before Tax Cash Flow: SALE 4,241,604 (-) Debt Service 296,872 296,872 296,872 296,872 296,872 Before Tax Cash Flows -2,563,600 111,023 131,684 153,354 176,083 4,441,528 NPV: 7.5% $932,751.02 IRR 15% Cash Flow 2nd Approach: 70% LTV -1,538,160 407,894 428,556 450,226 472,955 496,796 (+) Before Tax Cash Flow: SALE 8,148,060 (-) Debt Service 415,620 415,620 415,620 415,620 415,620 Before Tax Cash Flows -1,538,160 -7,726 12,936 34,606 57,335 8,229,236 NPV: 7.5% $3,970,958.59 IRR 40% Cash Flow 2nd Approach: 50% LTV -2,563,600 407,894 428,556 450,226 472,955 496,796 (+) Before Tax Cash Flow: SALE 9,068,957 (-) Debt Service 296,872 296,872 296,872 296,872 296,872 Before Tax Cash Flows -2,563,600 111,023 131,684 153,354 176,083 9,268,881 NPV: 7.5% $4,060,690.09 IRR 32% Net Property Income 407,894 428,556 450,226 472,955 496,796 (-)Interest 356,229 290,621 218,143 138,075 49,624 (-)Depreciation 105,173 105,173 105,173 105,173 105,173 Taxable Income -53,508 32,762 126,910 229,707 341,999 Tax (20%) 0 6,552 25,382 45,941 68,400 Net Property Income 407,894 428,556 450,226 472,955 496,796 (-)Interest 254,421 207,558 155,789 98,598 35,419 (-)Depreciation 105,173 105,173 105,173 105,173 105,173 Taxable Income 48,301 115,825 189,264 269,184 356,204 Tax (20%) 9,660 23,165 37,853 53,837 71,241 Tax on Sale of Property 1st Approach Selling Price 6,543,751 Buying Price 5,127,200 Total Gain 1,416,551 Tax on Total Gain (20%) 283,310 Accumulated Depreciation 525,865 Tax on Accumulated Depreciation (20%) 105,173 Total Tax on Sale 388,483 2nd Approach Selling Price 11,371,104 Buying Price 5,127,200 Total Gain 6,243,904 Tax on Total Gain (20%) 1,248,781 Accumulated Depreciation 525,865 Tax on Accumulated Depreciation (20%) 105,173 Total Tax on Sale 1,353,954 After Tax Cash Flows Before Tax Cash Flows 1st Approach: 70% LTV -1,538,160 -7,726 12,936 34,606 57,335 3,401,883 Tax Charges 0 6,552 25,382 45,941 456,883 After Tax Cash Flows 1st Approach: 70% LTV -1,538,160 -7,726 6,383 9,224 11,393 2,945,000 $490,695.77 IRR 14% Before Tax Cash Flows 1st Approach: 50% LTV -2,563,600 111,023 131,684 153,354 176,083 4,441,528 Tax Charges 9,660 23,165 37,853 53,837 459,724 After Tax Cash Flows 1st Approach: 70% LTV -2,563,600 101,363 108,519 115,501 122,246 3,981,804 $542,016.67 IRR 12% After Tax Cash Flows Before Tax Cash Flows 2nd Approach: 70% LTV -1,538,160 -7,726 12,936 34,606 57,335 8,229,236 Tax Charges 0 6,552 25,382 45,941 1,422,354 After Tax Cash Flows 1st Approach: 70% LTV -1,538,160 -7,726 6,383 9,224 11,393 6,806,882 $2,993,047.03 IRR 35% Before Tax Cash Flows 2nd Approach: 50% LTV -2,563,600 111,023 131,684 153,354 176,083 9,268,881 Tax Charges 9,660 23,165 37,853 53,837 1,425,195 After Tax Cash Flows 1st Approach: 70% LTV -2,563,600 101,363 108,519 115,501 122,246 7,843,687 $5,391,123.99 IRR 28% 2017 ('000) 2018 ('000) 2019 ('000) 2020 ('000) 2021 ('000) 2022 ('000) 2023 ('000) BTCF: 1st Approach BTCF: 2nd Approach ATCF: 1st Approach ATCF: 2nd Approach NET PROPERTY INCOME/ NET OPERATING INCOME Projection of cash flow from income and sale of property at the end of year 5. Cash flows is an outcome of Net Property Income/Net Operating Income only. It is assume that the investment does not involve and debt and no tax is currently being paid. In this section, we want to observe the impact the loan and tax has on the real estate investment return. The main question is that, does leverage improve investment return before and after tax? Mortgage summary - Loan Amount: 70% LTV, 10% Interest, 20 years These tables show loan summary for a period of 5-year. What important is that it shows loan balance at the end of year five. We need these figures to compute profit on sale of property at the end of year 5. Remember that, there are two loan alternatives: 70% LTV and 50% LTV. Hence, two tables are needed to illustrate the impact it has on cash flows. Mortgage summary - Loan Amount: 50% LTV, 10% Interest, 20 years Next, after estimating the loan summary, we have to estimate BTCF from sale. The purpose of we doing this is to estimate cash that remains after deducting loan balance at the end of year five.
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