In the coming year, the McCormicks expect a potential rental property investment costing $180,000 to have gross potential rental income of $30,768,

vacancy and collection losses equaling 5%

of gross income, and operating expenses of $14,730.

The mortgage on the property is expected to require annual payments of $8,437.

The interest portion of the mortgage payments and the depreciation are given below for each of the next three years. The McCormicks are in the 24% marginal tax bracket. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.)

Year	Interest	Depreciation
1	$8,237	$6,482
2	8,137	6,482
3	8,037	6,482

The net operating income is expected to increase by 5% each year beyond the first year.

a. Calculate the net operating income (NOI) for each of the next three years.

b. Calculate the after-tax cash flow (ATCF) for each of the next three years.

Answer rating: 100% (QA)

a Net operating Income for year 1 1457756 Net operating Income for year 2 ... View the full answer