Math Problem Statement
You are considering a luxury apartment building project that requires a capital investment of 12,500,000. The building has 50 units. You expect the maintenance cost for the apartment building to be 250,000 in the first year, $300,000 in the second year, and increasing by 50,000 in subsequent years. The cost to hire a manager for the building is estimated to be 80,000 per year. After five years of operation, the apartment building can be sold for 14,000,000. What is the annual rent per apartment unit that will provide a return on investment of 15% per year? Assume the building will remain fully occupied during the five years. (provide your answer in the nearest dollars, i.e., no decimal places)
Solution
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Math Problem Analysis
Mathematical Concepts
Finance
Net Present Value (NPV)
Return on Investment (ROI)
Present Value (PV)
Cash Flows
Formulas
NPV formula: PV = \frac{Cash \ Flow}{(1 + r)^n}
Theorems

Suitable Grade Level
Advanced Finance
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