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A businessman is considering building a 25- unit apartment in a place near a progressive commercial center. He felt that because of the location of
A businessman is considering building a 25- unit apartment in a place near a progressive commercial center. He felt that because of the location of the apartment it will be occupied 90% at all times. He desires an MARR of 20%. Other pertinent data are the following: Building investment $5,000,000 Rent per unit per month 6,000 Maintenance per unit per year 500 Property taxes 1% of investment Insurance 0.50% of investment Cost of building after 20 years 2,000,000 Study period 20 years a. What is the rate of return of the investment? Write the answer in percentage value, up to 2 decimal places. (15pts) b. How much is the excess of the investment's cash flow? Roundoff answer to the whole number. (15pts) c. The payback period is Write the answer in two decimal places. (10pts) d. Should the businessman continue with the investment? Justify your answer. (5pts)
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