Question: please answer it as clearly as possible thanks Experiment 3 : Analysis of Profit Influencing Factors A group of private investors borrowed $30 million to
Experiment 3 : Analysis of Profit Influencing Factors 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%. a. Calculate the NPV, IRR, and pay-back-periods. a. Make analysis about the relation between the profit (or loss) and the occupancy rate. b. Make analysis about the relation between the profit (or loss) and the rate of borrowed money. The MARR of the private investors is 10%. Experiment 3 : Analysis of Profit Influencing Factors 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%. a. Calculate the NPV, IRR, and pay-back-periods. a. Make analysis about the relation between the profit (or loss) and the occupancy rate. b. Make analysis about the relation between the profit (or loss) and the rate of borrowed money. The MARR of the private investors is 10%
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