Consider a company that is building 10 apartments and assume that the company will be able to rent all the units once the construction is finished

Economics Aug 22, 2020

Consider a company that is building 10 apartments and assume that the company will be able to rent all the units once the construction is finished. The total construction cost is $1,000,000, annual insurance cost is $200,000 and assume that there is no salvage value. If the usefulllfe of the bullding is 10 years, calculate minimum monthly rent for a unit in order to cover the cost of this investment if MARR is 10% Select one: a. 1000 b. 10000 C.2000 d. 1785 8.4821 1.3022

Expert Solution

Total expense = 1,000,000+200,000= 1,200,000

Expected price at 10%= 1320,000

Rent for 1 apartment for 10year = 132,000

Rent for 1 month= 1100

So minimum value of rent would be option D

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