# 4. You are considering a luxury apartment building project that requires an investment of 12,500,000. You expect the maintenance cost for the apartment building to be \$250,000 the first year and \$300,

4. You are considering a luxury apartment building project that requires an investment of 12,500,000. You expect the maintenance cost for the apartment building to be \$250,000 the first year and \$300,000 the second year, after which it will continue to increase 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 present worth of the cash flow under MARR 15%? Assume that the building will remain fully occupied during the five years. Assume also that your tax rate is 35%. The building will be depreciated according to 39-year MACRS and will be placed in service in January during the first year of ownership and sold in December during the fifth year of ownership. 5. Consider the information given in question 4. If the inflation rate is 5% every year, what is the net present worth?

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4. You are considering a luxury apartment building project that requires an investment of 12,500,000. You expect the maintenance cost for the apartment building to be \$250,000 the first year and \$300,
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