Hi,

I got this problem about break even analysis which I'm not sure if my understanding to the problem is right. Anybody who could tell and explain how to solve this kind of problem.

I really appreciate your help. Thanks

Problem:

An apartment house consisting of ten independent units was built at a cost of 20,000(dollar) per unit. The lot on which it was built was bought at a cost of 60,000. The investment in the apartment house is expected to be recovered in 10 years. From similar houses built, it was found that the average maintenance cost per year was 2,000 for the 10 units. Insurance on the building is 3% of the first cost and real estate taxes on the building and lot is 3.5% annually on the total assessed valuation of 120,000. Income tax on the rental amounts to 10% on the gross revenue. The lot is expected not to decrease in value.

If money is worth 12% to the owner and the average occupancy is 90% determine the average monthly rental for each unit so that income and expenses will break even.