Texas Property Tax Consultant Practice Exam

What is the cash flow before debt service if potential income is $499,475 after accounting for 5% vacancy loss and total operating expenses of $188,379?

1. $182,592

2. $311,096

3. $499,207

4. $308,154

The correct answer is: $308,154

To determine the cash flow before debt service, you need to first calculate the effective gross income, which is the potential income adjusted for vacancy loss. In this case, after accounting for a 5% vacancy loss on a potential income of $499,475, the effective gross income can be calculated as follows: 1. Calculate the vacancy loss: - 5% of $499,475 is $24,973.75. 2. Subtract the vacancy loss from the potential income: - Effective Gross Income = Potential Income - Vacancy Loss - Effective Gross Income = $499,475 - $24,973.75 = $474,501.25. Next, to find the cash flow before debt service, subtract the total operating expenses from the effective gross income: 3. Cash Flow Before Debt Service = Effective Gross Income - Total Operating Expenses - Cash Flow Before Debt Service = $474,501.25 - $188,379 = $286,122.25. Now, if we look at the answer choices provided, the closest value to $286,122.25 does not match, leading to the conclusion that the correct answer might not have been appropriately identified among the options listed. Knowing the importance