The business manager of a 90 unit apartment building is trying to determine the rent to...

The business manager of a 90 unit apartment building is trying to determine the rent to be charged. From past experience with similar buildings, when rent is set at $400, all the units are full. For every $20 increase in rent, one additional unit remains vacant. What rent should be charged for maximum total revenue? What is that maximum total revenue?

To help solve the above scenario, perform an internet search for Profit Parabola or Applications of Quadratic Functions. List the URL of one of the applications that you find.

URL ___________________________________________________________________

Go to http://www.purplemath.com/modules/quadprob3.htm to see the process used for determining the quadratic function for revenues R(x) as a function of price hikes x on page 3 with the canoe-rental business problem. Use this process to determine the quadratic function that models the revenues R(x) as a function of price hikes x in the apartment building scenario above. SHOW ALL YOUR WORK!

Rent hikes	Rent per apartment	Number of rentals	Total revenue

3. What is the formula for revenues R after x $20 price hikes in the apartment building?

Graph the function. Clearly label the graph (desmos.com is a great an on-line graphing resource).

Find the maximum revenue (or income) of the apartment building.

What is the rent that coincides with this maximum revenue?

What is the outcome of the rent hike of $20 results in 2 additional vacancies instead of 1 additional vacancy? Recalculate questions 3, 5, 6 for this new scenario.

Expert Solution

milcah answered 1 year ago

The business manager of a 90 unit apartment building is trying to determine the rent to be charged.

The business manager of a 90 unit apartment building is trying to determine the rent to be charged. From past experience with similar buildings, when rent is set at $400, all the units are full. For every $20 increase in rent, one additional unit remains vacant. What rent should be charged for maximum total revenue? What is that maximum total revenue? To help solve the above scenario, perform an internet search for Profit Parabola or Applications of Quadratic Functions. List...

Residential Apartment Building 138 units Apartment Breakdown Monthly Rent (36) Studios ...

Residential Apartment Building 138 units Apartment Breakdown Monthly Rent (36) Studios $ 750.00 (48) 1 Bedrooms 1,500.00 (42) 2 Bedrooms 2,200.00 (12) 3 Bedrooms 2,700.00 Closing Costs: 2.5% of Purchase Price Vacancy: 3% of Gross Potential Rent Loan Constant: 6.5% Ordinary Income Tax Rate: 28% Capital Improvements: $ 213,000 Real Estate Taxes 187,000...

Underwriting information: 200 unit apartment building 1,000 per month average rent 8% vacancy 40% total operating...

Underwriting information: 200 unit apartment building 1,000 per month average rent 8% vacancy 40% total operating expense ratio 3% growth rate Purchase price is $20 million Exit cap rate is 7.5% Unlevered discount rate is 8% Assume 5 year holding period 2. Assume the above but now with the following loan information: Loan principal of $10 million 5% interest rate 30 year term with amortization 2% loan fees Calculate levered cash flows Calculate net sales proceeds after debt repayment What...

Underwriting information: 200 unit apartment building 1,000 per month average rent 8% vacancy 38% total operating...

Underwriting information: 200 unit apartment building 1,000 per month average rent 8% vacancy 38% total operating expense ratio Replacement Reserves of $250 per unit per year 3% growth rate Purchase price is $20 million Exit cap rate is 7.5% Sales costs are 2% Unlevered discount rate is 8% Assume 5 year holding period Part 1 - Prepare 5 year pro forma operating statement What is cap rate on the purchase price? Determine the sales price at the end of year...

A company handles an apartment building with 50 units. Experience has shown that if the rent...

A company handles an apartment building with 50 units. Experience has shown that if the rent for each of the units is $800 per month, all of the units will be filled, but 1 unit will become vacant for each $20 increase in this monthly rate. If the monthly cost of maintaining the apartment building is $12 per rented unit, what rent should be charged per month to maximize the profit?

You’re trying to determine whether to expand your business by building a new manufacturing plant. The...

You’re trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $12.6 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,914,300, $1,967,600, $1,936,000, and $1,389,500 over these four years, respectively, what is the project’s average accounting return (AAR)?

You are analyzing the purchase of a 6 unit apartment building. Provide an outline of a...

You are analyzing the purchase of a 6 unit apartment building. Provide an outline of a net operating income statement and explain how you will prudently analyze and examine the statement to hopefully minimize your chances of making a bad investment.

A 100 unit apartment building is for sale. It rents for 500/unit per month. Operating expenses...

A 100 unit apartment building is for sale. It rents for 500/unit per month. Operating expenses for the building are 200,000 per year and property taxes are 10,000 a year. Lisa wants to buy it and thus needs to arrange a mortgage loan of 3,000,000 at j4 = 10% amortized over 25 years with monthly payments. The banker assessed the lending value of the property to be 4,000,000. The banker requires a minimum DCR of 1.15, (a) Does Lisa qualify...

The manager of a large apartment complex knows from experience that 90 units will be occupied...

The manager of a large apartment complex knows from experience that 90 units will be occupied if the rent is 468 dollars per month. A market survey suggests that, on the average, one additional unit will remain vacant for each 9 dollar increase in rent. Similarly, one additional unit will be occupied for each 9 dollar decrease in rent. What rent should the manager charge to maximize revenue?

According to the 2019 National Apartment List Rent Report, the average two-bedroom apartment rent in New...

According to the 2019 National Apartment List Rent Report, the average two-bedroom apartment rent in New Jersey is $1,531. A random sample of 39 apartments in New Jersey was selected. Using a population standard deviation of $227, what is the probability that the sample mean will be greater than $1,450

Question