Annual operating-maintenance and insurance expenses

Assignment Help Financial Management

Reference no: EM13724080

A group of private investors borrowed $30 million to build 300 new luxury apartments near a large university. the money was borrowed at 6% annual interest, and the loan is to be repaid in equal annual amounts( principal and interest) over a 40-year period. annual operating, maintenance, and insurance expenses are estimated to be $4,000 per apartment, and these expenses are incurred independently of the occupancy rate for the apartments. the rental fee for each apartment will be $12,000 per year, and the worst-case occupancy rate is projected to be 80%. (5.5)

a) How much profit (or loss) will the investors make each year with 80% occupancy?

b) Repeat part (a) when the occupancy rate is 95%

Reference no: EM13724080

Questions Cloud

Use foreign currency exchange rates : On July 4, 2012, you convert $500,000 U.S. dollars to Japanese yen in the spot foreign exchange market and purchase a 1-month forward contract to convert yen into dollars. How much will you receive in U.S. dollars at the end of the month? (use foreig..

Assignment on international health care network : Provide examples that show how the WHO is involved with global health care assistance. Explain the role that the WHO plays in the prevention of communicable diseases.

Pedagogical and andragogical approaches : Write a research paper comparing and contrasting the pedagogical and andragogical approaches to instruction and learning.

Evaluate short-run and long-run total costs : How much output will the perfectly competitive firm produce to maximize profits and calculate the profit or loss. (Show your work.)

Annual operating-maintenance and insurance expenses : A group of private investors borrowed $30 million to build 300 new luxury apartments near a large university. the money was borrowed at 6% annual interest, and the loan is to be repaid in equal annual amounts( principal and interest) over a 40-year p..

Discuss the new product development process : Choose a product (not a service) which means it must be tangible. Prepare a paper addressing the following tasks on your selected product. Discuss the new product development process

Explain once in power revolutionaries transfored society : the essay question is on Issue 3 of the French Revolution. the question is "Once in power, the revolutionaries transfored society." How accurate is this statement?

What is the firms after-tax component cost of debt : A company's 8% coupon rate, semi-annual payment, $1,000 par value bond that matures in 20 years sells at a price of $593.17. The company's federal-plus-state tax rate is 30%. What is the firm's after-tax component cost of debt for purposes of calcula..

What is the companys cost of equity capital : David Ortiz Motors has a target capital structure of 35% debt and 65% equity. The yield to maturity on the company's outstanding bonds is 8%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 10.79%. What is the comp..

User Account

All Pages