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In: Accounting
A group of private investors borrowed $34,963,388million to build 300 new luxury apartments near a large...
A group of private investors borrowed
$34,963,388million to build 300 new luxury apartments near a large
university. The money was borrowed at 5% annual interest, and the
loan is to be repaid in equal annual amounts over a 40-year period.
Annual operating and maintenance expenses are estimated to be
$4,310 per
apartment. This expense will be incurred even if an apartment is
vacant. The rental fee for each apartment will be $14,506 per year,
and the worst case occupancy rate is projected to be 84%.
Investigate the sensitivity of annual profit (or loss) to changes
in occupancy rate. Express your answer in percent rounded to the
nearest hundedths.
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