You are considering an apartment building project that requires an investment of $15, 000, 000. This building has 30 units and you expect the maintenance cost for the apartment building to be $400, 000 the first year which will continue to increase by $50, 000 every year in sub-sequent years. The cost to hire a manager for the building is estimated to be $100, 000 per year. After 6 years of operation, the apartment building can be sold for $16, 000, 000. If the monthly rent per apartment unit is $5, 000, what would be the rate of return on this investment? Assume that the building will remain fully occupied during its six years of operation. In your analysis, you are expected to: (i) Use Excel to display the cash flow; (ii) Draw a Cash Flow Diagram; (iii) Use Excel to compute the internal rate of return of the CFD. use excel
You are considering an apartment building project that requires an investment of $15, 000, 000. This building has 30 units and you expect the maintenance cost for the apartment building to be $400, 000 the first year which will continue to increase by $50, 000 every year in sub-sequent years. The cost to hire a manager for the building is estimated to be $100, 000 per year. After 6 years of operation, the apartment building can be sold for $16, 000, 000. If the monthly rent per apartment unit is $5, 000, what would be the rate of return on this investment? Assume that the building will remain fully occupied during its six years of operation. In your analysis, you are expected to: (i) Use Excel to display the cash flow; (ii) Draw a Cash Flow Diagram; (iii) Use Excel to compute the internal rate of return of the CFD. use excel
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You are considering an apartment building project that requires an investment of
$15, 000, 000. This building has 30 units and you expect the maintenance cost for the apartment building to be $400, 000 the first year which will continue to increase by $50, 000 every year in sub-sequent years. The cost to hire a manager for the building is estimated to be $100, 000 per year.
After 6 years of operation, the apartment building can be sold for $16, 000, 000. If the monthly rent per apartment unit is $5, 000, what would be the rate of return on this investment ? Assume that
the building will remain fully occupied during its six years of operation. In your analysis, you are expected to: (i) Use Excel to display the cash flow; (ii) Draw a Cash Flow Diagram; (iii) Use Excel
to compute the internal rate of return of the CFD.
use excel
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