Your company purchased a block of $240$ apartments $5$ years ago for $$40$ million, and then spent $$2\mathrm{.}5$ million on a green roof which was installed $2$ years ago.

A project has been proposed in which each apartment would be renovated with double glazing and a new, highly efficient HVAC system. Each apartment

generates $$700$ a week in rent $($all fully occupied$).$ However, the renovation would mean groups of $40$ apartments would need to be free for $12$ months at a

time. The terms of the apartment lease mean that work could begin next year $(2022)$ on a rolling basis. It would take $6$ years to complete the renovation, for a

fixed price of $$12,000$ per apartment unit. Once an apartment has been renovated, the rent for that apartment will be increased to $$1000$ a week.

Perform a Net Present Value analysis over $10$ years for the unrenovated and renovated case. Assume the discount rate for the analysis is $4\%.$ Assume all

monies are accounted for at the end of a year and that once an apartment is renovated it is leased immediately at the higher rent, $$1000$ a week.

Answer: unrenovated $$70\mathrm{.}9$ million, renovated $$79\mathrm{.}3$ million