Use the information provided below to answer the question that follows: Project Type: Apartment Building Number of
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Use the information provided below to answer the question that follows:
Project Type: | Apartment Building | |
Number of Units: | 60 | |
Expected Rent Per Unit Per Month: | $2,000 | |
Site Acquisition Costs: | 8 acres @ $500,000 per acre | |
Site Development Costs: | 8 acres @ $100,000 per acre | |
Hard Construction Costs: | $130,000 per unit | |
Soft Construction Costs: | $25,000 per unit | |
Vacancy Rate: | 5% | |
Operating Expense Ratio: | 40% | |
Debt Service Coverage Ratio: | 1.25 | |
Interest Rate: | 5% per year | |
Amortization Period: | 30 years | |
Cap Rate for Apartment Buildings: | 6% | |
Required Return to Equity: | 8% |
Is this project feasible according to the value vs. cost approach?
Related Book For
Fundamental Accounting Principles Volume II
ISBN: 978-1259066511
14th Canadian Edition
Authors: Larson Kermit, Jensen Tilly
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