Fred and Barney are looking for an investment. Near Prinstone University is a student housing building. It's physically rock solid (of course) but the stone-age friends aren't sure if it is a good investment.
Here's the information that they were given (amounts in clams):
Gross Income $10,000
Income tax savings $1,000 (What the owners will save in annual income taxes.)
After Tax Flow $2,100
Operating expenses/ Net Operating Inc. 90%
Does the building have a positive cash flow? Show your work by creating a "good form" cash flow statement. What is the debt service ratio for the property?