The following information applies to Questions 1 and 2:
Net Operating Income: $14,000
Depreciation: $4,000
Debt Service: $13,000 (interest is $12,000 of this amount)
Vacancy and Credit Loss: $7,000
Interest Expense: $12,000
Operating Expenses: $3,000
Tax rate: 28%
1. Assuming that the investor can use any tax shelter benefits, what are the taxes due or the taxes saved ($$$) for these annual figures?
2. Assuming that the investor can use any tax shelter benefits, what is the cash flow after taxes?