BASIC METHODS IN MAKING ECONOMY STUDIES Problem 1A newly-built business property of Ms. Theresa, containing space for astore and two offices, can be purchased for P1.2 million. Ms. Menche, aprospective buyer estimates that during the next 10 years she can obtain annualrentals of at least P273,000 from the property and that the annual out-of-pocketdisbursements will not exceed P60,000. She believes that she should be able todispose the property at the end of 10 years at not less than P700,000. Annualtaxes and insurance will total 2.5% of the firs cost. What is the Payback Periodof the investment if she had to borrow 25% of the required capital, on the basisof 10-year amortization with interest of 18%?
BASIC METHODS IN MAKING ECONOMY STUDIES Problem 1A newly-built business property of Ms. Theresa, containing space for astore and two offices, can be purchased for P1.2 million. Ms. Menche, aprospective buyer estimates that during the next 10 years she can obtain annualrentals of at least P273,000 from the property and that the annual out-of-pocketdisbursements will not exceed P60,000. She believes that she should be able todispose the property at the end of 10 years at not less than P700,000. Annualtaxes and insurance will total 2.5% of the firs cost. What is the Payback Periodof the investment if she had to borrow 25% of the required capital, on the basisof 10-year amortization with interest of 18%?
Chapter2: Loads On Structures
Section: Chapter Questions
Problem 1P
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BASIC METHODS IN MAKING ECONOMY STUDIES
Problem 1
A newly-built business property of Ms. Theresa, containing space for a
store and two offices, can be purchased for P1.2 million. Ms. Menche, a
prospective buyer estimates that during the next 10 years she can obtain annual
rentals of at least P273,000 from the property and that the annual out-of-pocket
disbursements will not exceed P60,000. She believes that she should be able to
dispose the property at the end of 10 years at not less than P700,000. Annual
taxes and insurance will total 2.5% of the firs cost. What is the Payback Period
of the investment if she had to borrow 25% of the required capital, on the basis
of 10-year amortization with interest of 18%?
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