PODS on annual contracts

He invested $250,000 and borrowed $1,000,000 to purchase the PODS. The business is doing well, 90% of the PODS are rented on annual contracts, but $300,000 is due on the note and the balance is payable over the next five years. Jerry does not have the cash to make the note payment, so he went to see the Pirates about a loan. Jerry has prepared the taxable income and cash flow projections presented below. Jerry has depreciated for two years the seven year assets. The book value of the PODS is $765,000 and their total fair market value is $1,020,000. Below are Jerry’s projected income statement and cash flow. These are optimistic numbers because Jerry currently has no competition but he has heard rumors that he will have a competitor in the upcoming years. Also, insurance rates could rise and the lease on the land expires next year. Years