A group of private investors borrowed $$27$ million to build $300$ new luxury apartments near a large

university. The money was borrowed at $8\%$ annual interest, and the loan is to be repaid in equal

annual amounts $($principal and interest$)$ over a $40-$year period. Annual operating, maintenance, and

insurance expenses are estimated to be $$4,500$ per apartment, and these expenses are incurred

independently of the occupancy rate for the apartments. The rental fee for each apartment will be

$$13,000$ per year, and the worst$-$case occupancy rate is projected to be $80\%.$

a$.$ How much profit $($or loss$)$ will the investors make each year with $80\%$ occupancy?

b$.$ Repeat Part $($a$)$ when the occupancy rate is $95\%.$

Click the icon to view the interest and annuity table for discrete compounding when the MARR

is $8\%$ per year.