After-Tax Cash Flows - HP 12c Platinum Reference Manual

14 Real Estate
2. Calculate the Outstanding Balance of the Mortgage at the end of the Income
Projection Period and subtract it from Proceeds of Resale. The result is Net Cash
Proceeds of Resale.
Thus:
Cash Proceeds of Resale = Sales Price - Transaction Costs.
Net Cash Proceeds of Resale = Cash Proceeds of Resale - Outstanding Mortgage Balance.
Example: The apartment property in the preceding example is expected to be resold in 10
years. The anticipated resale price is $800,000. The transaction costs are expected to be
7% of the resale price. The mortgage is the same as that indicated in the preceding
example.
•
What will the Mortgage Balance be in 10 years?
•
What are the Cash Proceeds of Resale and Net Cash Proceeds of Resale?
12c platinum / 12C
RPN Keystrokes
gÂ
fCLEARG
20gA
11.5gC
700000$
P
10gA
M
800000\
7b-
+

After-Tax Cash Flows

The After-Tax Cash Flow (ATCF) is found for the each year by deducting the Income
Tax Liability for that year from the Cash Throw Off.
Where Taxable Income = Net Operating Income - interest - depreciation,
Tax Liability = Taxable Income x Marginal Tax Rate,
and After Tax Cash Flow = Cash Throw Off - Tax Liability.
The After-Tax Cash Flow for the initial and successive years may be calculated by the
following HP 12C Platinum program. This program calculates the Net Operating Income
using the Potential Gross Income, operational cost and vacancy rate. The Net Operating
12c platinum
ALG Keystrokes
gÂ
fCLEARG
20gA
11.5gC
700000$
P
10gA
MM
800000-
7b+
~³
Display
Mortgage term.
240.00
Mortgage rate.
0.96
Property value.
Monthly payment.
-7,465.01
Projection period.
120.00
Mortgage balance in 10 years.
-530,956.57
Estimated resale.
Cash Proceeds of Resale.
744,000.00
Net Cash Proceeds of Resale.
213,043.43
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