Facts and information listed below is needed to resolve questions 70 and 73:
On January 1st of last year, Lauren purchased a shopping center (building and land) at a 9.6% cap rate. Lauren made an initial investment of $1,750,000 in cash and took out a non-recourse loan in the amount of $7,000,000. The bank made Lauren sign a personal guarantee in the amount of $1,400,000 or 20% of the total loan. On December 31st of the current year, her books and records showed the following items (alphabetically arranged for your convenience) and amounts:
Gross Potential Rents$ 1,393,227.
Depreciation Expense$ 238,636.
Insurance Expense$ 21,224.
Management Fees$ 63,672.
Mortgage Interest $ 531,925.
Mortgage Principal Payment $ 116,399.
Other Operating Expenses$ 222,854.
Property Taxes$ 90,203.
Vacancy and Credit Loss$ 69,661.
70. What is Laurens’s net operating income (loss) and taxable income (loss) for the year?
71. What is Lauren’s taxes payable (benefit) assuming her Federal income tax rate is 39.6%; please do not add the additional 3.8% surcharge in calculating the taxes to be paid.
72. What is Lauren’s before tax and after tax cash flows?
73. What are Lauren’s pre-tax cash on cash and after-tax cash on cash returns?