ABC Residential Investors, LLP, is considering the purchase of a 120-unit apartment complex in Steel City, Pennsylvania. A marketstudy of the area reveals that an average rental of $600 per month per unit could be realized in the appropriate market area. Duringthe last six months, two very comparable apartment complexes have sold in the same market area. The Oaks, a 140-unit project, soldfor $9 million. Its rental schedule indicates that the average rent per unit is $550 per month. Palms, a 90-unit complex, is presentlyrenting units at $650 per month, and its selling price was $6.6 million. The mix of number of bedrooms and sizes of units for bothcomplexes is very similar to that of the subject property, and both appear to have normal vacancy rates of about 10 percent annually.All rents are net as tenants pay all utilities and expenses.Required:a. Based on the data provided here, how would an appraiser establish an estimate of value? (Do not round intermediate calculations.Round your final answers to the nearest dollar amount.)ComparableThe OaksPalmsEstimated Value

Gross Rent Multiplier:It represents a metric used for the evaluation of the property price and the…

Answered: ABC Residential Investors, LLP, is…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The engineering team at Manuel's Manufacturing, Inc., is planning to purchase an enterprise resource planning (ERP) system. The software and installation from Vendor A costs $410,000 initially and is expected to increase revenue $110,000 per year every year. The software and installation from Vendor B costs $290,000 and is expected to increase revenue $95,000 per year. Manuel's uses a 4- year planning horizon and a 12.0% per year MARR. Part a 8 Your answer is incorrect. What is the present worth of each investment? Vendor A: $ Vendor B: $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±20.
4

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