Question

An apartment complex generates $335,000 in effective rental income and $2,500 in other income. The same complex has $144,000 in operating expenses and $116,000 in debt service payments. What is the pre-tax cash flow of the complex?

A) $75,000
B) $77,500
C) $193,500
D) $337,500

Answer 1

B) $ 77,500

Explanation:

The company's pre-tax cash flow = total income - operating expenses - cost of servicing debt = 335 000 + 2500 - 144 000 - 116 000 = $ 77,500