2. A businessman is considering building a 25-unit apartment in a place near a progressive commercial center. He felt that because of the location of the apartment it will be occupied 90% at all time. He desires a rate of return of 20%. Other pertinent data are the following: P 5,000,000 7,000,000 20 years 20,000,000 2,000,000 6,000 500 Land investment Building investment Study period Cost of land after 20 years Cost of building after 20 years Rent per unit per month Upkeep per unit per year Property taxes Insurance Is this a good investment? 1% 0.50%
2. A businessman is considering building a 25-unit apartment in a place near a progressive commercial center. He felt that because of the location of the apartment it will be occupied 90% at all time. He desires a rate of return of 20%. Other pertinent data are the following: P 5,000,000 7,000,000 20 years 20,000,000 2,000,000 6,000 500 Land investment Building investment Study period Cost of land after 20 years Cost of building after 20 years Rent per unit per month Upkeep per unit per year Property taxes Insurance Is this a good investment? 1% 0.50%
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please give a detailed solution to this problem. Do not use any software and just solve manually. Thank you.
Transcribed Image Text:2. A businessman is considering building a 25-unit apartment in a place
near a progressive commercial center. He felt that because of the
location of the apartment it will be occupied 90% at all time. He
desires a rate of return of 20%. Other pertinent data are the following:
P 5,000,000
7,000,000
20 years
20,000,000
2,000,000
6,000
500
Land investment
Building investment
Study period
Cost of land after 20 years
Cost of building after 20 years
Rent per unit per month
Upkeep per unit per year
Property taxes
Insurance
1%
0.50%
Is this a good investment?
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