A newly constructed building stands on a plot costing Rs. 100000. The construction cost of building

A newly constructed building stands on a plot costing Rs. 100000. The construction cost of building is Rs. 2000000 and the estimated life of building is 66 years. The investor wants a 5% return on land cost and 8% return on the construction cost. Calculate the annual rent to be charged if annual repairs cost 0.5% of cost of construction and other outgoings equal 30% of gross rent. The co-efficient for sinking fund at 3% for 66 years may be taken as 0.005. a. 10250 b. 12050 c. 17262 d. 15200 Ans - c Return on land cost = 5% of 100000 = 5000 Return on construction cost = 6% of 2000000 = 120000 Total Income desired = Rs. 125000 (a) Let gross annual rental be 'r' Outgoings: Annual repairs = 0.5% of 2000000 = 10000 Other outgoings = 30% of r or 0.30 r Amount towards sinking fund = 0.005 x 2000000 = 10000 Hence, net income = r - 0.30 r - 20000 (b) Equating (a) and (b), 0.70r - 20000 = 125000 0.70r = 125000 + 20000 0.70r = 145000 r = 145000/(0.70*12) = 17262 Hence, rent per month = Rs. 17262

 

Sir...Return on construction cost..8% aayega na...apne 6%kyu lia?And amount towards sinking fund is 10000...why u took r-0.30r-20000 instead of r-0.30r-10000

 

bhai 10000 to anual constrctn cost and 10000 sinking fund total 20000

 

mcmillan book me bhi 6% liya gaya hai mai confuse ho gaya hu

 

Its 6% sir..wrongly written in question it has to be 6% @Mahesh Nani