Determining minimum monthly rent to make investment


A firm plans to append 300 luxury apartments to its complex in Cohoes. Cost of land now is $16 million including taxes and fees. Construction cost is expected to be $64 million including cost of central amenities. Annual maintenance and operating cost is expected to be $450,000. Company also guess market value of the property to be 72% of construction price after 11 years. Average occupancy rate of 88% is expected each year. Determine minimum monthly rent needed to make this investment economically acceptable if company's minimum rate of return is 6% per year, compounded monthly?

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Accounting Basics: Determining minimum monthly rent to make investment
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