Real Estate Principles 3rd Edition by David Ling,Wayne Archer

Exercise 7

Use the following information to answer questions 7-9:
You have just purchased an apartment complex that has a $1,000,000 depreciable basis. You are in the 28 per­cent ordinary tax bracket and 25 percent depreciation recap­ture bracket. Capital gains will be taxed at 15 percent. You discount future tax benefits from depreciation at 10 percent. Assume for simplicity that you would depreciate the prop­erty on a straight-line basis over 28 (not 27½) years.
If you sold the property at the end of five years, what would be the present value of the depreciation deductions, net of all taxes due on sale