Question

Flve years ago, Flrm SJ purchased land for $117,000 with $10,000 of Its own funds and $107,000 borrowed from a commerclal bank. The bank holds a recourse mortgage on the land. For each of the following Independent transactions, compute SJ's positive or negative cash flow. Assume that SJ is solvent, any recognized loss is fully deductible, and SJ's marginal tax rate Is 21 percent. (Cash outflows should be Indicated by a mlnus sign.) a. SJ sells the land for $50,000 cash and the buyer's assumption of the $80,000 princlpal balance of the mortgage b. SJ sells the land for $130,000 cash and pays off the $80,000 principal balance of the mortgage c. SJ sells the land for $90,500 cash and pays off the $80,000 principal balance of the mortgage d. SJ defaults on the $80,000 mortgage. The bank forecloses and sells the land at public auction for $65,700. The bank notifies SJ that It will not pursue collection of the $14,300 remalning debt. e. SJ defaults on the $80,000 mortgage. The bank forecloses and sells the land at public auction for $65,700. The bank requires SJ to pay off the $14,300 remaining debt a. Net cash fow b. Net cash fow c. Net cash flow d. Net cash flow e. Net cash flow 47,270 47,270

Answer 1

rage he movtagc moun = 50,oco t 80,000 Baris land l 300C (O0 Caen received 5p /ale $50,000

tells dfie, land fo 130,000 8o0onpai balance he moatage Rolged amount oomle: $130,000 0 O an ce m凸oltage Recognind gaj an ale - 130,000H,00013000 月est oepag mer& ヒチ80,000 O. 2, X 13000 . a 13C ax730 Net cahdloo OUj - 30,000 80.000 730 470

dhe arid fe も701 500 8o,oco poindipal balance gthe mertage 90,500 · ーチ26500 $5565 乞 $80,000 received ση δα1le 90,500-80,000 + 556 5-=16065

oreclonoll he lond t pustic auehico for Coftecfion ged amount en pale land value - $65,100 важ ชีั land 5130014300 3 700O From leổ deduchon da" haki tog, ะ 0.aux37000: $44+0 0t9 는チキチチ。 Ne-Cash floc。

no/5 € 63 dehaudb σ1,the $60,000 montage.me bonn toleelones and adla die land at public aucticn fr 65Toohe banh Realiged anoorton hale (land vahe) メ65700 651001000 $1300 004 10173 300 mer) 35&チ 3524

Amount Nct cash foco 4131O