Assumptions

Assumptions for $69 per week:
Property value – $340,000.00
Purchasing costs – $12,355.00
Investment by purchaser – $35,000.00
Loan amount – $325,105.00
Equity position – $14,895.00
Capital growth rate – 4.00%
Inflation rate (CPI) – 4.00%.

Cash deductions:
Interest only (IO) – 6.50%
Rental expenses – 46.01%
Pre-tax cash flow – $-35,000.00

Non Cash deductions:
Depreciation of building – 2.50%
Depreciation of fittings – $20,400.00
Loan costs – $7,750.00

Total deductions:
Tax credit – 38.50%
After tax cash flow – $-35,000.00
Rate of Return – 12.63%
Pre-Tax equivalent – 20.53%

Property details:
Property costs – $340,000.00
Gross rent (Yr 1) – $18,345.00
Net rent (Yr 1) – $9,732.00