Ahmed (Tax filler) has find a house at ABC city for sale for $170,000. It is estimated that $90,000 is the value of the land and $80,000 is the value of the house. He is purchasing the house on January 1 to rent and plans to own the house for 10 years. After 10 years, it is expected that the house and land can be sold on December 31 for $580,000. Total annual expenses (maintenance, property taxes, insurance, etc.) are expected to be $5,500 per year. The rental income is expected to be $6,000 per year with annual increment of 7%. The house would be depreciated by Income Tax Ordinance, 2001 (FBR). Capital gain and income tax rate is AOP/Individual as per tax 2021 (2020-2021), Use 1 USD = 79.9
a) Construct the after-tax cash flow for the 10-year project life.
b) Determine the after-tax rate of return on this investment.
c) If Ahmed could sell the house after 3 years at 250,000 would his rate of return be better than if he kept for 10 years? It is suggested to find actual ROR and make comparison.

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TAX RATES FOR IND (OTHER THAN SALARIED PERSON) & AOP 2020-21 TAX CARD 2020 - 21 S. No Income Group Rate 1 Up to Rs. 400,000 Nil 2 Rs. 400,001 to Rs. 600,000 5% exceeding 400,000 3 Rs. 600,001 to Rs. 1,200,000 Rs. 10,000 + 10% exceeding 600,000 4 Rs. 1,200,001 Rs. 2,400,000 Rs. 70,000 + 15% exceeding 1,200,000 to 5 Rs. 2,400,001 to Rs. 3,000,000 Rs. 250,000 + 20% exceeding 2,400,000 6 Rs. 3,000,001 to Rs. 4,000,000 Rs. 370,000 + 25% exceeding 3,000,000 Rs. 4,000,001 to Rs. 6,000,000 Rs. 620,000 + 30% exceeding 4,000,000 8 Rs. 6,000,001 and above Rs. 1,220,000 + 35% exceeding 6,000,000 TAX RATES FOR RENTAL INCOME 2020-21 TAX CARD 2020 - 21 Individuals and AOP Income Group Rate of Tax Up to Rs. 200,000 0% Rs. 200,001 to Rs. 600,000 5% exceeding 200,000 Rs. 600,001 to Rs. 1,000,000 Rs. 20,000 + 10% exceeding 600,000 Rs. 1,000,001 to Rs. 2,000,000 Rs. 60,000 + 15% exceeding 1,000,000 Rs. 2,000,001 to Rs. 4,000,000 Rs. 210,000 + 20% exceeding 2,000,000 Rs. 4,000,001 to Rs. 6,000,000 Rs. 610,000 + 25% exceeding 4,000,000 Rs. 6,000,001 to Rs. 8,000,000 Rs. 1,110,000 + 30% exceeding 6,000,000 Rs. 8,000,001 Above Rs. 1,710,000 + 35% exceeding 8,000,000 Tax on capital gains S.No Particulers Filers Non-Filers 1. Gain is less than 5 M 2.5% 5% 2. 5 M to 10 M 5% 10% 10 M to 15 M 7.5% 15% 4 15 M and above 10% 20% 3. TAX RATES FOR IND (OTHER THAN SALARIED PERSON) & AOP 2020-21 TAX CARD 2020 - 21 S. No Income Group Rate 1 Up to Rs. 400,000 Nil 2 Rs. 400,001 to Rs. 600,000 5% exceeding 400,000 3 Rs. 600,001 to Rs. 1,200,000 Rs. 10,000 + 10% exceeding 600,000 4 Rs. 1,200,001 Rs. 2,400,000 Rs. 70,000 + 15% exceeding 1,200,000 to 5 Rs. 2,400,001 to Rs. 3,000,000 Rs. 250,000 + 20% exceeding 2,400,000 6 Rs. 3,000,001 to Rs. 4,000,000 Rs. 370,000 + 25% exceeding 3,000,000 Rs. 4,000,001 to Rs. 6,000,000 Rs. 620,000 + 30% exceeding 4,000,000 8 Rs. 6,000,001 and above Rs. 1,220,000 + 35% exceeding 6,000,000 TAX RATES FOR RENTAL INCOME 2020-21 TAX CARD 2020 - 21 Individuals and AOP Income Group Rate of Tax Up to Rs. 200,000 0% Rs. 200,001 to Rs. 600,000 5% exceeding 200,000 Rs. 600,001 to Rs. 1,000,000 Rs. 20,000 + 10% exceeding 600,000 Rs. 1,000,001 to Rs. 2,000,000 Rs. 60,000 + 15% exceeding 1,000,000 Rs. 2,000,001 to Rs. 4,000,000 Rs. 210,000 + 20% exceeding 2,000,000 Rs. 4,000,001 to Rs. 6,000,000 Rs. 610,000 + 25% exceeding 4,000,000 Rs. 6,000,001 to Rs. 8,000,000 Rs. 1,110,000 + 30% exceeding 6,000,000 Rs. 8,000,001 Above Rs. 1,710,000 + 35% exceeding 8,000,000 Tax on capital gains S.No Particulers Filers Non-Filers 1. Gain is less than 5 M 2.5% 5% 2. 5 M to 10 M 5% 10% 10 M to 15 M 7.5% 15% 4 15 M and above 10% 20% 3.