Cost breakdown Land $ 1,000,000 Improvements 9,000,000 (capitalized) Points 100,000 (amortized over loan term) Subtotal $10,100,000 Organization fee 100,000 (amortized over 5 years) Syndication expenses 100,000 (capitalized) Total funding required $10,300,000 Financing Loan amount $ 8,000,000 Interest rate 11% Term 25 years (monthly payments) Points $ 100,000 Partnership facts and equity requirements Organization: December, year 1 Number of partners: 1 general partner and 35 limited partners Equity capital contribution: General partner, 10%; limited partners, 90% Cash assessments: None Cash distributions from operations: General partner, 10%; limited partners, 90% Taxable income and losses from operations: General partner, 10%; limited partners, 90% Allocation of gain or loss from sale: General partner, 15%; limited partners, 85% Cash distribution at sale: Based on capital account balances Operating and tax projections Potential gross income (year 2) $1,750,000 Vacancy and collection loss 10% of potential gross income Operating expenses (year 2) 35% of effective gross income Depreciation method Straight-line, 31.5 years Projected growth in income 3% per year $13,500,000 Projected resale price after 5 years Limited partners' tax rate 28% General partner's tax rate 28% Selling expenses 5% a. Determine an estimated return (ATIRR) for a limited partner. (Hint: Consider all 35 limited partners as a single investor.) b. Determine an estimated return (ATIRR) for the general partner. c. Why do the returns differ for the general and limited partners?