Assume the following information about a commercial warehouse facility. $1,500,000 Original cost Book value Market value...

  

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Assume the following information about a commercial warehouse facility. $1,500,000 Original cost Book value Market value $ 1,800,000 $1,500,000 Value of the building Value of the land Annual depreciation $ 300,000 0 Debt $ 100,000 0 a. b. C. d. P e. f. Rate Term Payment Investor's tax rate Year 1 NOI Growth in NOI $ $ 12% 10 years 17,698 15% 338,900 0% Calculate the after-tax cash flows from operations for the next ten years. Assuming the investor has a 12 percent required rate of return (discount rate), calculate the present value of the after-tax cash flows from operations for the 10 year period. Calculate the after-tax cash flows from a sale-leaseback assuming: an annual lease expense of $275,000, the property is sold in period 0 for $1,800,000, and repurchased for $1,800,000 in year 10. Assuming a 12 percent discount rate, calculate the present value of the after-tax cash flows from operations for the 10 year period under this set of assumptions. Calculate the cash flows to the buyer-lessor. (Assume the buyer-lessor is in the 15 percent tax bracket). Assuming that the buyer-lessor has a discount rate of 12 percent, calculate the present value of the cash flows. Assuming no objections to the arrangement from the IRS, should the sale- leaseback be undertaken? Why or why not? Assume the following information about a commercial warehouse facility. $1,500,000 Original cost Book value Market value $ 1,800,000 $1,500,000 Value of the building Value of the land Annual depreciation $ 300,000 0 Debt $ 100,000 0 a. b. C. d. P e. f. Rate Term Payment Investor's tax rate Year 1 NOI Growth in NOI $ $ 12% 10 years 17,698 15% 338,900 0% Calculate the after-tax cash flows from operations for the next ten years. Assuming the investor has a 12 percent required rate of return (discount rate), calculate the present value of the after-tax cash flows from operations for the 10 year period. Calculate the after-tax cash flows from a sale-leaseback assuming: an annual lease expense of $275,000, the property is sold in period 0 for $1,800,000, and repurchased for $1,800,000 in year 10. Assuming a 12 percent discount rate, calculate the present value of the after-tax cash flows from operations for the 10 year period under this set of assumptions. Calculate the cash flows to the buyer-lessor. (Assume the buyer-lessor is in the 15 percent tax bracket). Assuming that the buyer-lessor has a discount rate of 12 percent, calculate the present value of the cash flows. Assuming no objections to the arrangement from the IRS, should the sale- leaseback be undertaken? Why or why not?

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Lets go through each part of the question step by step a Calculate the AfterTax Cash Flows from Operations for the Next Ten Years To calculate afterta... View the full answer