Question

Suppose a developer is interested in building a new apartment community. Through her market research, the developer has determined that the target market segment potential in year 1 consists of 100 households. The developer believes that the target market segment potential will grow by 5% annually over the next five years. If the developer projects a capture rate of 25% for each of the next five years, how many units does she plan on selling by the end of year 5

Answer 1

Answer:

The developer intends to sell 138 units by the end of year 5

Explanation:

The 100 units grows at the 5% per year, hence you would in the attached spreadsheet the applicable number of housing units per year, which is calculated by multiplying previous year's units with 1.05

Since capture rate is 25% the number of expected sale is 25% of the total of 552.56 as given in the attached.

Download xlsx

Answer 2

Answer:

138

Explanation:

See the attachment for the calculations and explanation.