(a) What is the After-Tax IRR (ATIRR), % rounded to four decimals, on incremental investment for...

 

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(a) What is the After-Tax IRR (ATIRR), % rounded to four decimals, on incremental investment for Buying/Owning? (b) Is it better to Buy/Own or Rent the property? (c) What is the Break-Even annual rent for Year 1? [Holding other things the same, what annual rent for year 1 would provide After-Tax IRR (on incremental investment for Buying/Owning) equal to the Alternative After- Tax Return?] (d) What is the Break-Even Prepayment Penalty, % rounded to four decimals? [Holding other things (including Year 1 rent) the same, what Prepayment Penalty% would provide After-Tax IRR (on incremental investment for Buying/Owning) equal to the Alternative After-Tax Return?] Property Information Purchase price $750,000 $48,000 $4,000 4.00 4.00 $2,700 $2,900 3.50 50.00 2.00 5.00 0.00 Alternative After-Tax Return, % 5.00 Property Tax is calculated based on the BOY Property Value. Property Tax and Interest are tax deductible. Expecting to sell the Property at EOY: First Year Rent/Year First Year Rent/ Month Rental growth rate, % APR Property growth rate, % APR First Year Insurance First Year Maintenance Expense growth, % APR Marginal tax rate, % Property tax, % Selling expenses (not tax deductible), % Capital Gains Tax, % 2 Loan Information Loan-to-value ratio Loan amount Interest rate, % APR Loan term (years) Payments (per year) Prepayment Penalty,% Discount Points, % Prepayment Penalty % is applied to the loan balance at the time of prepayment. 80.00 $600,000 Discount Fees are eligible for tax deduction at the time of purchase (time 0) of this property. Adequte cash is available for down payment and payment of dicount fees. Break-Even Rent/Year for Year 1 6.00 30 12 3.50 4.00 ? (a) What is the After-Tax IRR (ATIRR), % rounded to four decimals, on incremental investment for Buying/Owning? (b) Is it better to Buy/Own or Rent the property? (c) What is the Break-Even annual rent for Year 1? [Holding other things the same, what annual rent for year 1 would provide After-Tax IRR (on incremental investment for Buying/Owning) equal to the Alternative After- Tax Return?] (d) What is the Break-Even Prepayment Penalty, % rounded to four decimals? [Holding other things (including Year 1 rent) the same, what Prepayment Penalty% would provide After-Tax IRR (on incremental investment for Buying/Owning) equal to the Alternative After-Tax Return?] Property Information Purchase price $750,000 $48,000 $4,000 4.00 4.00 $2,700 $2,900 3.50 50.00 2.00 5.00 0.00 Alternative After-Tax Return, % 5.00 Property Tax is calculated based on the BOY Property Value. Property Tax and Interest are tax deductible. Expecting to sell the Property at EOY: First Year Rent/Year First Year Rent/ Month Rental growth rate, % APR Property growth rate, % APR First Year Insurance First Year Maintenance Expense growth, % APR Marginal tax rate, % Property tax, % Selling expenses (not tax deductible), % Capital Gains Tax, % 2 Loan Information Loan-to-value ratio Loan amount Interest rate, % APR Loan term (years) Payments (per year) Prepayment Penalty,% Discount Points, % Prepayment Penalty % is applied to the loan balance at the time of prepayment. 80.00 $600,000 Discount Fees are eligible for tax deduction at the time of purchase (time 0) of this property. Adequte cash is available for down payment and payment of dicount fees. Break-Even Rent/Year for Year 1 6.00 30 12 3.50 4.00 ?

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a What is the AfterTax IRR ATIRR rounded to four decimals on incremental investment for BuyingOwning ATIRR 581 b Is it better to BuyOwn or Rent the pr... View the full answer