A construction company wants to build a 50 housing unit apartment complex and rent them. It is expected that a 90% occupancy rate. When you consider below financial data, how much rent it has to charge per housing unit to guarantee annual %15 income Land Value 1.000.000 $, Construction Cost 2.500.000 $, Annual Maintenance cost 150.000 $, Real Estate Tax as 5% of total investment cost Analysis Period 25 years, Salvage value is only land value

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

A5.

 

A construction company wants to build a 50 housing unit apartment complex and rent them.
It is expected that a 90 % occupancy rate. When you consider below financial data, how much
rent it has to charge per housing unit to guarantee annual %15 income
Land Value 1.000.000 $,
Construction Cost 2.500.000 $,
Annual Maintenance cost 150.000 $,
Real Estate Tax as 5% of total investment cost.
Analysis Period 25 years,
Salvage value is only land value
Transcribed Image Text:A construction company wants to build a 50 housing unit apartment complex and rent them. It is expected that a 90 % occupancy rate. When you consider below financial data, how much rent it has to charge per housing unit to guarantee annual %15 income Land Value 1.000.000 $, Construction Cost 2.500.000 $, Annual Maintenance cost 150.000 $, Real Estate Tax as 5% of total investment cost. Analysis Period 25 years, Salvage value is only land value
Expert Solution
steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Capital Gains and Losses
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education