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 but is only to sell 26 apartment units in each of the next five years, in which year will her actual sales first fail to meet her projected sales numbers?

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Business

Rihanna Burton

18 March, 21:01

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 but is only to sell 26 apartment units in each of the next five years, in which year will her actual sales first fail to meet her projected sales numbers?

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Samir Lara · Answer 1

YEAR 3

Explanation:

From 100 houshold willuing to purchase apartment the developer project 25% capture rate thus, 25% market share

This number of household will increase at 5% per year but their apartment capacity to sale will reimain constant at 26 per year thus:

year 1 25 household

year 2 25 household + 5% increase = 26

year 3 26 household + 5% increase = 27

By year 3 it will hace projected sales for 27 but the actual sales will be of 26 as it doesn't have 27 apartment for sale thus, failing to meet that number