A businessman is considering building a 25 unit apartment. The occupancy rate is expected to be 90% at all time. He desires a ROR of 20% in his investment. Other data are: Land investment = P5,000,00O Building construction = P7,000,000 Life of investment = 20 years Cost of land after 20 years = P20,000,000 Cost of building after 20 years = P2,000,000 Rent per unit per month = P10,000 Maintenance per unit per year P2500 Taxes per year = 1% Insurance per year = 0.50% Is this a good investment? Use AW method.

A businessman is considering building a 25 unit apartment. The occupancy rate is expected to be 90% at all time. He desires a ROR of 20% in his investment. Other data are: Land investment = P5,000,00O Building construction = P7,000,000 Life of investment = 20 years Cost of land after 20 years = P20,000,000 Cost of building after 20 years = P2,000,000 Rent per unit per month = P10,000 Maintenance per unit per year P2500 Taxes per year = 1% Insurance per year = 0.50% Is this a good investment? Use AW method.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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