profitability of this investment
Not what you're looking for?
"I bought a one unit apartment (2 bedrooms, 2 baths, kitchen and living room) of the Executive Center for $300,000 with a loan from BOH for 6% per year, payable in equal monthly installments over a 20 year period. I hired also the Best Western Company to manage the unit for a fee of $500 a month. Before I rented the apartment to 4 students at $500 a month each, I spent $100,000 of my own money to renovate, replace the furniture, install wireless connections and new television. " I need your advice whether this is a financially viable investment. Support your recommendation with three financial indicators, (a) net present value of total cost, total revenue and cash flow, (b) the benefit cost ratio and (c) internal rate of return of the proposed investment. (d) your conclusion about the profitability of this investment.
Purchase this Solution
Solution Summary
The profitability of this investment is assessed.
Solution Preview
Initial investments:
Loan 300,000
Renovation 100,000
400,000
Interest rate 6%
Loan period 20 years
Management fee 500
Expected revenue:
Number of tenants 4
Rental revenue per tenant 500
2,000 ...
Purchase this Solution
Free BrainMass Quizzes
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.