Question

The NOI is $1,000,000, the debt service is $800,000 of which $700,000 is interest, the depreciation expense is $250,000. What is the before-tax cash flow (BTCF) to the equity investor if there are no capital improvement expenditures or reversion items this period

Answer 1

Answer:

$200,000

Explanation:

We can define before tax cash flow (BTCF) as the amount of money gotten by an investment after receiving all of the revenues and payment of all bills, but without removing any other noncash items or depreciation, and before any calculation of income tax consequences is been done.

To calculate the Before-tax cash flow if there are no capital improvement expenditures or reversion items this period, simply calculate it by doing this

= PBTCF – DS

= $1,000,000 - $800,000

= $2,00,000.