Question

A reserve account is set up for a 48-unit apartment building for periodic replacement of these components: Interior paint for each apartment unit every 3 years: $1,500 Resurface building's roof every 15 years: $18,000 Interior carpet in each apartment unit every 5 years: $4,000 Refrigerator/disposal in each apartment every 12 years: $1,200 What is the annual reserve required for this apartment building?

Answer 1

Answer:

$68,400

Explanation:

For the entire building, computed below is the annual reserve for each cost element.

Interior paint for each apartment unit every 3 years = $1,500

Interior paint for each apartment per year = $1,500/3 = $500

Interior paint for all 48 units per year = 48 * 500 = $24,000

Resurface of building roof every 15 years = $18,000

Annually, resurface of building roof = $18,000/15 = $1,200

Interior carpet for each apartment every 5 years = $4,000

Interior carpet for each apartment per year = $4,000/5 = $800

Interior carpet for the all 48 units per year = 48 * 800 = $38,400

Refrigerator/disposal in each apartment every 12 years = $1,200

Refrigerator in each apartment per year = $1,200/12 = $100

Refrigerator for all 48 units per year = 48 * 100 = $4,800

Therefore, the annual reserve required for the entire building

= 24,000 + 1,200 + 38,400 + 4,800

= $68,400.