Calculate the after tax irr assuming no cash flow

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XYZ LLC is planning to purchase land and a commercial building for $200,000,000. An appraisal of the property has identified that 15% of the purchase price relates to land with the remaining relating to the building. A Cost Segregation Study ("Cost Seg") was performed which showed that 90% of the building cost related to real property and that 8% and 2% related to 7 and 5 year personal property respectively. XYZ LLC plans to hold the property for 7 years and then sell it for $210,000,000.

Problem 1: Calculate the after tax IRR assuming no cash flow other then tax savings from depreciation under two alternatives: 1) assuming no Cost Seg data is used to calculated depreciation and 2) Cost Seg data is used. Also, assume that when the personal property is sold that it will have no value.

Reference no: EM132686448

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