What is the required monthly leasing cost for each unit

Assignment Help Financial Management
Reference no: EM13813560

A 30-unit apartment building should last 35 years, when it will need to be either replace or undergo major renovation. Assume the building’s value at 35 years will be 10% of its construction cost. Assume it will be sold, and that the land’s cost will be recovered in full.

$3.2 Million                 Land

$4.8 Million                 Building

$850,000                     Annual operating and maintenance

6%                               Annual property taxes and insurance (% of initial investment)

12%                             Vacancy rate

a. If the owner wants a 15% rate of return, what is the required monthly leasing cost for each unit?

b. If turning 2 units into an exercise facility would decrease the vacancy rate by 5%, would that be a good decision?

Reference no: EM13813560

Questions Cloud

Par value with a coupon rate-debt of total capital : Micro Spinoffs, Inc., issued 10-year debt a year ago at par value with a coupon rate of 8%, paid annually. Today, the debt is selling at $1,160. The firm’s tax bracket is 35%. Micro Spinoffs also has preferred stock outstanding. The stock pays a divi..
Analyze the current state of the government regulation : Analyze the current state of the government regulation of product safety to determine whether the referenced agencies are generally proactive or reactive. Provide one (1) specific example of each agency to support your response.
Discuss key terms issues and conditions for legal confession : Discuss the key terms, issues, and conditions for a legal confession. Write a 2-3 page paper (300-400 words) summarizing the case and your analysis
Determine the types of monitoring : Determine the types of monitoring
What is the required monthly leasing cost for each unit : A 30-unit apartment building should last 35 years, when it will need to be either replace or undergo major renovation. Assume the building’s value at 35 years will be 10% of its construction cost. Assume it will be sold, and that the land’s cost will..
Find the time taken by the stone to reach the ground : Find the time taken by the stone to reach the ground. and the speed with which it hits the ground
How does memory affect the accuracy of eyewitness : How does memory affect the accuracy of eyewitness identification? What are some police procedures and legal rules that can reduce the inaccuracy of eyewitness identification
Valuation allowance for trading investment : On January 1, 2015, Valuation Allowance for Trading Investment has a zero balance. On December 31, 2015, the cost of trading securities portfolio was $64,200, and the fair value was $67,000. Prepare the December 31, 2015, adjusting journal entry to r..
Customer relationship management : Customer Relationship Management

Reviews

Write a Review

Financial Management Questions & Answers

  Proposed acquisition of new clinical laboratory test system

You have been asked to evaluate the proposed acquisition of a new clinical laboratory test system. The systems price is $50,000, and it will cost another $10,000 for transportation and installation. What is terminal cash flow at end of year 3? If the..

  Discuss the operation of monetary policy in the us

Define monetary policy, and discuss the operation of monetary policy in the United States post-GFC.

  Explain capital asset pricing model

Security A has an expected rate of return of 6%, a standard deviation of returns of 30%, a correlation coefficient with the market of -0.25, and a beta coefficient of -0.5. Security B has an expected return of 11%

  Require an effective annual interest rate

You are considering a 20-year, $1,000 par value bond. Its coupon rate is 9%, and interest is paid semi-annually. If you require an "effective" annual interest rate (not a nominal rate) of 10.59%, how much should you be willing to pay for the bond? Do..

  Calculate the net income for stumble-on-inn last year

DuPont Analysis Last year, Stumble-on-Inn Inc. reported an ROE of 18 percent. The firm’s debt ratio was 55 percent, sales were $15 million, and the capital intensity was 1.25 times. Calculate the net income for Stumble-on-Inn last year.

  Horizontal analysis of income statement

Prepare a three-year horizontal analysis of the income statement and balance sheet of your selected company. Discuss the importance and meaning of horizontal analysis

  Explain how the ebit chart works

Explain how the EBIT Chart works inputs determining the outputs-the two lines on the chart and the indifference point.

  What would be your average annual rate of return

Two years after the bonds were issued, the going rate of interest on similar bonds fell to 8 percent. At what price would the bonds sell and If you bought the bond on the issue date at the issue price and expected to hold it until it matures on Dec..

  Important characteristics of getting a high sales price

One of the most important characteristics of getting a high sales price is high net revenue to working interest ratio. Why would a company looking to pursue an acquisition place high importance on this factor?

  Future value of an annuity-saving for retirement

Your client is 35 years old; and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $9,000 per year; and you advise her to invest it in the stock market, which you expect to provide an average ret..

  Capital expenditures to increase competitiveness

Should Microsoft increase their capital expenditures to increase competitiveness? This will almost always be true but what segments of the business get the most capital allocated to them and why?

  What are the clinics expected total costs

What is the clinic's underlying cost structure and what are the clinic's expected total costs and what are the clinic's estimated total costs at 7,500 visits? At 12,500 visits?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd