Develop a pro forma income statement

Assignment Help Financial Accounting
Reference no: EM132902522

Question - Evaluate the purchase of an existing 500 unit apartment complex for $20000000, the building is assumed to have a 20 year functional life. Treat the rents as being collected at the end of each year, along with associated variable and fixed costs. Assume rent controls will prohibit the rent from being raised over the life of the building. Assume that the underlying property reverts to the original owners at the end of twenty years, and that you will also be responsible for demolition and clean-up costs, to be incurred at the end of the building's life. Rentals are estimated at 450 units per year. Each unit will be rented for a cumulative monthly amount of $20000 per year. Cost per unit when rented $8000 per year. Fixed costs $3000000 per year for the building, other than the initial investment. Demolition/Clean up $4500000 after-tax. Depreciation is to be straight-line. Assume the project can be financed at 8% (before-tax) using debt. Tax Rate is 21%. Develop a pro forma income statement and compute the after-tax operating cash-flow (OCF). If P is the rental price, which is the equation for EBIT in terms of P?

Reference no: EM132902522

Questions Cloud

Martin gardner argument for the objectivist view of art : What is Martin Gardner's argument for the objectivist view of art? Use Vaughn's textbook to help you explain Gardner's theory and its strengths and weaknesses.
What is the time limit and monetary liability : With the recent hacking of Equifax, identity theft is on the rise. What is the time limit and monetary liability that you have, if you victim of Credit fraud
Explain the merger with atos and motiv : Explain the merger with Atos and Motiv? Was it a good merger
Find what is the effective annual rate : If the annual percentage rate (APR) is 12% and the compounding period is daily, what is the effective annual rate (EAR)? Enter your answer
Develop a pro forma income statement : Develop a pro forma income statement and compute the after-tax operating cash-flow (OCF). If P is the rental price, which is the equation for EBIT in terms of P
Prepare the journal entries for department : Assume a company issues $40,000 and $55,000 of raw material for production use in its Mixing department and Packaging department, respectively.
What amount should the payee be willing to accept instead : What amount should the payee be willing to accept instead of the last three payments, if money can earn 8.5% compounded semiannually
How much will need to invest today to be able : The stated interest rate is 6% (APR). If interest is compounded monthly, how much will you need to invest today to be able to make your down payment?
Prepare journal entries : On October 1, 2020, Yost Company purchased 4,000 of tb P1,000 face amount, Prepare journal entries for 2020 and 2021

Reviews

Write a Review

Financial Accounting Questions & Answers

  Profits and losses in the ratio

A partnership agreement on May 1, 2015. Farrell contributes $50,000 and Jimmy contributes $150,000 as their capital contributions. They decide to share profits and losses in the ratio of their respective capital account balances.

  Provide examples of items that would be adjusted directly

Provide some examples of items that would be adjusted directly against equity, rather than being included as part of profit or loss. explain in detail

  Find what is difference between actual and budgeted costs

If Stone had actual overhead costs of $348400 for 28000 units produced, what is the difference between actual and budgeted costs?

  General ledger entry to record the purchase of materials

The general ledger entry to record the purchase of materials is:

  Determine the initial price of a futures contract

Determine the initial price of a futures contract on the same ZCB of the previous two questions. The futures contract has an expiration of t = 4.

  Determine what is the expected gain from the forward hedging

Explain If you were the financial manager of Cray Research, would you recommend hedging this euro receivable? Why or why not?

  Why is important for a business to minimize the length

Why is important for a business to minimize the length of its cash conversion cycle? What are the benefits of an aggressive financing strategy

  Explain the rationale behind the inverse

Explain the rationale behind the inverse relationship between bond prices and market interest rates. A fundamental principle of bond investing

  National investor group is opening an office in portland

national investor group is opening an office in portland. fixed monthly costs are office rent 8500 depreciation on

  What is hope company times interest earned

Income Taxes-$45,000, Interest Expense-25,000 and Net Income-80,000. What is Hope's Company times interest earned for 2019?

  What would be the effect of the change on net profit

The liability would go up by $24 000. The company's income tax rate is 30%. What would be the effect of the change on 2019 net profit?

  Prepare a report showing profitability for each product

Prepare a report showing profitability for each product for the next year using the traditional overhead allocation method. Prepare a report showing profitability for each product using activity-based costing.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd