In a college town, a friend of yours spent $100,000 on a small apartment building. She paid $10,000 out of her own pocket for the structure and obtained a $90,000 mortgage from a local bank. The annual bank mortgage payment is $10,500. Your friend also anticipates that annual building and grounds maintenance will cost $15,000. There are four apartments (two bedrooms each) in the building that can each be rented for $360 per month. Refer to the Engineering Economy and Design process, answer the following: a. Is there a problem with your friend? What is it, if so? b. What options does she have? (Please state at least three) c. Calculate the economic consequences and other necessary data for the alternatives in Part b. d. Choose a criterion for differentiating between alternatives and use it to advise your friend on which course path to take. e. Attempt to analyze and compare the alternatives in view of at least one criterion in addition to cost. f. What should your friend do based on the information you and she have generated?
In a college town, a friend of yours spent $100,000 on a small apartment building. She paid $10,000 out of her own pocket for the structure and obtained a $90,000 mortgage from a local bank. The annual bank mortgage payment is $10,500. Your friend also anticipates that annual building and grounds maintenance will cost $15,000. There are four apartments (two bedrooms each) in the building that can each be rented for $360 per month. Refer to the Engineering Economy and Design process, answer the following: a. Is there a problem with your friend? What is it, if so? b. What options does she have? (Please state at least three) c. Calculate the economic consequences and other necessary data for the alternatives in Part b. d. Choose a criterion for differentiating between alternatives and use it to advise your friend on which course path to take. e. Attempt to analyze and compare the alternatives in view of at least one criterion in addition to cost. f. What should your friend do based on the information you and she have generated?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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