Suppose that you are considering an investment in an apartment building. The specifics are The building is five years old, has a 90 percent occupancy rate, and has an expected useful life of 30 years a) Assume that this occupancy rate is expected to continue for the life of the building b) There are 120 2-bedroom units, 100 1-bedroom units, and 60 studios. The 2-bedroom units rent for $3000 per month, the 1-bedroom units for $2000 per month, and the c) studios for $900 per month d) Current rent control laws will prevent the rents from ever being raised The estimated annual maintenance cost for the building is $1200000 per year (this is independent of the e) number of apartments rented) f) There is an additional estimated maintenance cost at $245 per unit per month, when each unit is rented There will be no salvage value to the building in 30 years, but it is estimated that it will cost 5 million dollars at that time to demolish the building as will be required in the purchase contract. (You are not g) purchasing the land. You will have a 30-year lease of the land, which is paid for in the purchase of the building.) The asking price of the building is $35 million. i) h) The tax-rate is 35%, and assume the building will be fully depreciated over its useful life. Develop the pro-forma income statement, compute the Operating Cash-Flows, and determine whether you should make this investment if you require a 9% (after-tax) return on investments like this. A MAYBE; NPV between -220000 and 280000 B YES; NPV between 1280000 and 1780000 C YES; NPV between 280000 and 780000 D YES; NPV greater than 1780000 E YES; NPV between 780000 and 1280000 Assume that your bossy boss wants you to do a sensitivity analysis regarding the project. He is concerned that the vacancy rate may increase by as much as 5% (occupancy will go down to 85%). Compute the NPV for this scenario (round to nearest $10,000) A ($1,910,000) B ($1,960,000) C ($1,860,000) D ($1,810,000) E ($2,010,000) 6