Engineering Economics

A businessman is considering building a 25 unit apartment. The occupancy rate is expected to be 90% at all time. He desires a ROR of 20% in his investment. Other data are: Land investment = P5,000,000 Building construction = P7,000,000 Life of investment = 20 years Cost of land after 20 years = P20,000,000 Cost of building after 20 years = P2,000,000 Rent per unit per month = P10,000 Maintenance per unit per year = P2500 Taxes per year = 1% Insurance per year = 0.50% Is this a good investment? Use AW method. Answer: Investment is justified, but what is the value of the difference between Cash Inflow and Cash Outflow