A group of private investors borrowed $25 million to build 300 new luxury apartments near a large university. The money was borrowed at 8% annual interest, and the loan is to be repaid in equal annual amounts over a 40-year period Annual operating, maintenance, and insurance expenses are estimated to be $3,500 per apartment. This expense will be incurred even if an apartment is vacant. The rental fee for each apartment will be $10,000 per year, and the worst-case occupancy rate is projected to be 80%. Investigate the sensitivity of annual profit (or loss) to (a) changes in the occupancy rate and (b) changes in the annual rental fee Click the icon to view the interest and annuity table for discrete compounding when the MARR is 8% per year. C
A group of private investors borrowed $25 million to build 300 new luxury apartments near a large university. The money was borrowed at 8% annual interest, and the loan is to be repaid in equal annual amounts over a 40-year period Annual operating, maintenance, and insurance expenses are estimated to be $3,500 per apartment. This expense will be incurred even if an apartment is vacant. The rental fee for each apartment will be $10,000 per year, and the worst-case occupancy rate is projected to be 80%. Investigate the sensitivity of annual profit (or loss) to (a) changes in the occupancy rate and (b) changes in the annual rental fee Click the icon to view the interest and annuity table for discrete compounding when the MARR is 8% per year. C
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Please fill out the spaces and answer the questions. Use table provided.

Transcribed Image Text:3/30/23, 5:01 PM
N
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
30
35
40
45
50
Single Payment
Compound
Amount
Factor
To Find F
Given P
FIP
1.0800
1.1664
1.2597
1.3605
1.4693
1.5869
1.7138
1.8509
1.9990
2.1589
2.3316
2.5182
2.7196
2.9372
3.1722
3.4259
3.7000
3.9960
4.3157
4.6610
5.0338
5.4365
5.8715
6.3412
Discrete Compounding; /= 8%
6.8485
10.0627
14.7853
21.7245
31.9204
46.9016
Present
Worth Factor
To Find P
Given F
PIF
0.9259
0.8573
0.7938
0.7350
0.6806
0.6302
0.5835
0.5403
0.5002
0.4632
0.4289
0.3971
0.3677
0.3405
0.3152
0.2919
0.2703
0.2502
0.2317
0.2145
0.1987
0.1839
0.1703
0.1577
0.1460
0.0994
0.0676
0.0460
0.0313
0.0213
Compound
Amount
Factor
To Find F
Given A
FIA
1.0000
2.0800
3.2464
4.5061
5.8666
7.3359
8.9228
10.6366
12.4876
14.4866
16.6455
18.9771
21.4953
24.2149
27.1521
30.3243
33.7502
37.4502
41.4463
45.7620
50.4229
55.4568
60.8933
66.7648
73.1059
113.2832
172.3168
259.0565
386.5056
573.7702
Uniform Series
Present
Worth Factor
To Find P
Given A
PIA
0.9259
1.7833
2.5771
3.3121
3.9927
4.6229
5.2064
5.7466
6.2469
6.7101
7.1390
7.5361
7.9038
8.2442
8.5595
8.8514
9.1216
9.3719
9.6036
9.8181
More Info
10.0168
10.2007
10.3711
10.5288
10.6748
11.2578
11.6546
11.9246
12.1084
12.2335
Sinking
Fund
Factor
To Find A
Given F
AIF
1.0000
0.4808
0.3080
0.2219
0.1705
0.1363
0.1121
0.0940
0.0801
0.0690
0.0601
0.0527
0.0465
0.0413
0.0368
0.0330
0.0296
0.0267
0.0241
0.0219
0.0198
0.0180
0.0164
0.0150
0.0137
0.0088
0.0058
0.0039
0.0026
0.0017
Capital
Recovery
Factor
To Find A
Given P
AIP
1.0800
0.5608
0.3880
0.3019
0.2505
0.2163
0.1921
0.1740
0.1601
0.1490
0.1401
0.1327
0.1265
0.1213
0.1168
0.1130
0.1096
0.1067
0.1041
0.1019
0.0998
0.0980
0.0964
0.0950
0.0937
0.0888
0.0858
0.0839
0.0826
0.0817

Transcribed Image Text:A group of private investors borrowed $25 million to build 300 new luxury apartments near a large university. The money was borrowed at 8% annual interest, and the loan is to be repaid in equal annual amounts
over a 40-year period Annual operating, maintenance, and insurance expenses are estimated to be $3,500 per apartment. This expense will be incurred even if an apartment is vacant. The rental fee for each
apartment will be $10,000 per year, and the worst-case occupancy rate is projected to be 80%. Investigate the sensitivity of annual profit (or loss) to (a) changes in the occupancy rate and (b) changes in the
annual rental fee.
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 8% per year.
Complete the table below (Round to the nearest thousands)
Rental Fee
$4,000
75%
80%
Occupancy Rate, $
85%
90%
95%
100%
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