An engineer plans to build his own 35m x 5m 5-storey apartment building and have it leased
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Question:
An engineer plans to build his own 35m x 5m 5-storey apartment building and have it leased in the next 30 years. The ground floor is reserved for business lease while the remaining floors are for residential. Assuming that the building will be always 100% occupied, what is the effective rate of return of this investment?
Details:
Units per floor: 5
Land investment: PhP 9,000/m^2
Building investment: PhP20,000/m^2
Cost of land after 30 years: Php40,000/m^2
Cost of building after 30 years: Php10,000/m^2
Monthly rent for residential lease: PhP10,000/unit
Monthly rent for business lease: PhP15,000/unit
Tax (initial investment): 2%
Monthly building maintenance: Php30/m^2
Insurance: 1%
Study period: 30
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