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You have a building with 8 apartments. The construction cost of the building is 4 million...

You have a building with 8 apartments. The construction cost of the building is 4 million
QAR. The annual rent for each is 150,000 QAR/year. You rent the apartments using 7 years’
contracts.
a. If all your customers deposit the rental amounts in the bank over the 7 years of their
contracts, and that banks reward deposits with 6% annually, what is the amount you
will find at maturity?
b. What’s the present value of all the contracts?
c. If you want to sell the building with a 25% profit margin applied to the construction cost
to which you add the present value of the apartments, what would be the minimum
price you would accept to seal the deal?
d. What would be the minimum price you would accept if two apartments are vacant?

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