**Answer:**

b. $640,465.32

**Explanation:**

**Options include **<em>"$1,800,000, $640,465, ($132,558), $614,846, $704,512"</em>

I/Y = 0.42% [5%/12]

N = 360 [12*30]

PV = -$18,000,000 [-30000000*60%]

FV = $0

So, we calculate the PMT using financial calculator

Monthly payment (CPT) = PMT(I/Y. N, PV, FV)

Monthly payment (CPT) = PMT(0.42%. 360, 18000000, 0)

Monthly payment (CPT) = $96,627.89

Before-tax cash flow = Expected year 1 net operating income - 12*PMT

Before-tax cash flow = $1,800,000 - 12*$96,627.89

Before-tax cash flow = $1,800,000 - $1,159,534.68

Before-tax cash flow = $640,465.32