Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer it as clearly as possible thanks Experiment 3 : Analysis of Profit Influencing Factors A group of private investors borrowed $30 million to

please answer it as clearly as possible thanks image text in transcribed
Experiment 3 : Analysis of Profit Influencing Factors A group of private investors borrowed $30 million to build 300 new luxury apartments near a large university. The money was borrowed at 6% 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 $4,000 per apartment, and these expenses are incurred independently of the occupancy rate for the apartments. The rental fee for each apartment will be $12,000 per year, and the worst-case occupancy rate is projected to be 80%. a. Calculate the NPV, IRR, and pay-back-periods. a. Make analysis about the relation between the profit (or loss) and the occupancy rate. b. Make analysis about the relation between the profit (or loss) and the rate of borrowed money. The MARR of the private investors is 10%. Experiment 3 : Analysis of Profit Influencing Factors A group of private investors borrowed $30 million to build 300 new luxury apartments near a large university. The money was borrowed at 6% 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 $4,000 per apartment, and these expenses are incurred independently of the occupancy rate for the apartments. The rental fee for each apartment will be $12,000 per year, and the worst-case occupancy rate is projected to be 80%. a. Calculate the NPV, IRR, and pay-back-periods. a. Make analysis about the relation between the profit (or loss) and the occupancy rate. b. Make analysis about the relation between the profit (or loss) and the rate of borrowed money. The MARR of the private investors is 10%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Renewable Energy Finance Funding The Future Of Energy

Authors: Charles W Donovan

2nd Edition

1786348594, 9781786348593

More Books

Students also viewed these Finance questions