Question
A real-estate broker bought a building consisting of 15 apartments for $ 5,000,000. This broker signed a contract $ 200,000 with a marketing and sales
A real-estate broker bought a building consisting of 15 apartments for $ 5,000,000. This broker signed a contract $ 200,000 with a marketing and sales company. The Revenue generated from all sales will be handed in right after the sale of the last apartment, the broker estimates that if the price/apartment is x, then (15-x) apartments will be annually sold. (One unit of x is $ 100,000). Assume that ( 15/( 15x) ) is a whole integer. Use continuous compounding to find the price/apartment that maximizes the present worth of the broker. Use a 9% discount rate.
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